Can creditors seize your CTS, AFP fund, or pension in Peru?

The core misunderstanding: assuming your CTS and AFP are either fully untouchable or fully exposed

When someone is facing a debt lawsuit, it’s common to assume one of two contradictory things: that your CTS and AFP fund can never be touched no matter what, or that they work just like any other bank account and can be garnished outright. Neither is correct. The law protects these savings with specific — and different — rules that depend on the type of debt and on which stage your money is in.

Your CTS: protected, with one exception — support debts, up to 50%

Article 37 of D.S. N° 001-97-TR, which approves the Consolidated Text of Peru’s CTS (severance pay) law, is clear:

“Los depósitos de la compensación por tiempo de servicios, incluidos sus intereses, son intangibles e inembargables salvo por alimentos y hasta el 50%. Su abono sólo procede al cese del trabajador cualquiera sea la causa que lo motive, con las únicas excepciones previstas en los Artículos 41 y 43 de esta Ley. Todo pacto en contrario es nulo de pleno derecho.”

(“CTS deposits, including their interest, are untouchable and protected from garnishment except for support debts, and up to 50%. They can only be paid out when employment ends, regardless of the reason, with the sole exceptions set out in Articles 41 and 43 of this Law. Any agreement to the contrary is void.”)

In plain terms: for any debt that isn’t support — a credit card, a bank loan, a commercial debt, anything — your CTS is fully protected. The only exception is a support debt, and there the cap is 50% of your accumulated deposits and interest. The other 50% stays protected even then.

This protection has a technical name: intangibility. It isn’t just that it can’t be garnished; the law expressly states that “any agreement to the contrary is void” — you can’t even sign away this protection by contract.

Your AFP fund: an even broader protection, with no support exception in its own text

While your money sits inside your AFP (Administradora de Fondos de Pensiones, Peru’s private pension fund manager) — before you start collecting a pension — it’s governed by a different rule: Article 20 of D.S. N° 054-97-EF, which approves the Consolidated Text of Peru’s Private Pension Fund System Law:

“Los bienes que integran los Fondos de Aportes Obligatorios, el Encaje Legal, el Fondo de Longevidad, el Fondo Complementario y los aportes voluntarios con fin previsional y, en general, las garantías que determine la Superintendencia son inembargables.”

(“The assets that make up the Mandatory Contribution Funds, the Legal Reserve, the Longevity Fund, the Complementary Fund, and voluntary pension-purpose contributions, and, in general, the guarantees the Superintendency determines, are protected from garnishment.”)

This protection covers your mandatory contributions and several technical funds the system manages. And unlike the article that protects your CTS, this one does not include, in its own text, an exception for support debts. That doesn’t necessarily mean a support debt can never reach your fund through some other legal route outside this specific article — but the rule that declares the fund protected from garnishment doesn’t itself carve out that exception.

Once you start collecting your pension, the rules change

Article 20’s protection applies while the money is still inside the AFP, accumulating. The moment you retire and start receiving a monthly pension, that money stops being governed by the AFP law and falls under the general income-garnishment rules in Article 648, paragraph 6, of the Code of Civil Procedure:

“Las remuneraciones y pensiones, cuando no excedan de cinco Unidades de Referencia Procesal. El exceso es embargable hasta una tercera parte. Cuando se trata de garantizar obligaciones alimentarias, el embargado procederá hasta el sesenta por ciento del total de los ingresos, con la sola deducción de los descuentos establecidos por ley.”

(“Wages and pensions, when they do not exceed five Procedural Reference Units. The excess is garnishable up to one third. When securing support obligations, garnishment proceeds up to sixty percent of total income, with only the deductions required by law subtracted first.”)

In practice, that means:

• Pension up to 5 Procedural Reference Units (URP): fully protected, regardless of the type of debt.
• Anything above that, for an ordinary debt: only a third of the excess is garnishable.
• Anything above that, for a support debt: the cap widens to 60% of your total income.

This same rule applies whether your pension comes from an AFP or from ONP (Peru’s public pension system) — Article 648 protects “wages and pensions” broadly, without distinguishing which system they come from.

A different mechanism from garnishment: using your CTS as loan collateral

There’s a mechanism sometimes confused with garnishment, but it’s legally distinct: Article 40 of D.S. N° 001-97-TR lets your own CTS secure loans from your employer or your credit union:

“La compensación por el tiempo de servicios devengada al 31 de diciembre de 1990, así como los depósitos de la compensación por tiempo de servicios y sus intereses sólo pueden garantizar sumas adeudadas por los trabajadores a sus empleadores por concepto de préstamos, adelantos de remuneración, venta o suministro de mercadería producida por su empleador, siempre que no excedan en conjunto del 50% del beneficio. Igualmente, pueden garantizar los préstamos y sus intereses otorgados al trabajador por las Cooperativas de Ahorro y Crédito a que pertenece siempre que en conjunto no exceda del límite establecido en el párrafo anterior.”

(“CTS accrued as of December 31, 1990, as well as CTS deposits and their interest, may only secure amounts workers owe their employers for loans, salary advances, or merchandise produced and supplied by the employer, provided they don’t together exceed 50% of the benefit. They may likewise secure loans and their interest granted to the worker by the credit union they belong to, provided the total doesn’t exceed the limit set in the previous paragraph.”)

The key difference: this isn’t a court order against your will — it’s something you agree to yourself when you accept the loan. But the practical effect is similar — up to 50% of your CTS can end up committed as collateral, much like the support-debt cap.

Extraordinary AFP withdrawals: separate rules, not covered here

Since 2020, Congress has passed several “extraordinary withdrawal” laws letting AFP members withdraw part of their fund before retiring. Each of these laws carries its own conditions and limits, and at least one recent case allowed a judge to order part of a withdrawal withheld to cover a support debt.

This page doesn’t cover those extraordinary withdrawals or their withholding rules, because they’re temporary, specific to whichever law creates them, and they change over time — unlike the permanent protection regime this page does cover. If you owe child or spousal support and are considering an extraordinary withdrawal, check first whether a law authorizing it is currently in force and what its specific rules are.

Foreigners

If you work in Peru under the standard private-sector labor regime, you accrue CTS and contribute to an AFP (or ONP) under the same rules as a Peruvian worker, and the same garnishment protections described here apply regardless of your nationality — what determines their application is your employment relationship in Peru, not your country of origin.