Dow Jones Newswires reported that the bill was approved in an 11-to-10 vote, with one abstention.
Peru's Finance Minister Luis Miguel Castilla announced in May the government's plans to reform the private pension fund system. Mr. Castilla said at the time that the government aimed to lower commissions the funds charge by attracting competition with new pension funds and increasing coverage among workers.
Among the measures to increase coverage, the legislation requires independent workers under 40 years old to sign up with a private pension fund.
The government's reforms have been given mixed reviews by the private sector, which says that it could affect the revenue of the pension funds and their ability to manage investments. A representative from Peru's private sector pension association wasn't immediately available for comment.
Opposition lawmakers say that there wasn't enough time to debate the proposals and that the approval was rushed.
The private pension system, which includes four private pension funds, was established in 1993 and has registered about 5 million people.
The pension funds include AFP Horizonte SA (HORIZC1.VL), which is owned mainly by Holding Continental and Spain's Banco Bilbao Vizcaya Argentaria SA (BBVA, BBVA.MC). AFP Integra SA (INTEGRC1.VL) is owned by Colombia's Grupo de Inversiones Suramericana SA (GIVSY, GRUPOSURA.BO). AFP Profuturo's main shareholder is a unit of Bank of Nova Scotia (BNS, BNS.T), while Prima AFP is controlled by Peru's Credicorp Ltd. (BAP, BAP.VL).