• Live
    • Audio Only
  • google plus
  • facebook
  • twitter
News > Latin America

Chile Moves Closer to Scrapping Pinochet-Era Pension System

  • Chile's private pensions system has been met with ongoing protests .

    Chile's private pensions system has been met with ongoing protests . | Photo: Xinhua

Published 14 April 2017
Opinion

Opponents of the current system say the interests of private companies are overriding that of Chilean pensioners and workers.   

Chile President Michelle Bachelet announced on Wednesday that her government will be overhauling the country’s private pensions system introduced by U.S.-backed dictator Augusto Pinochet, which continues to leave many retirees short changed.

RELATED:
Thousands of Chilean Students Take to Streets Demanding Education Reform

As part of “a new social saving system,” Bachelet said that she would send a bill to congress to impose a contribution from employers of 5 percent over six years to help boost the size of the pensions system.

Just over 90 percent of participants in the private pension system receive around half the minimum wage. The changes are expected to bring an increase of around 20 percent in savings for current pensioners and up to 50 percent increases in savings for workers who are currently paying into the pensions system.

The Chilean model of private pensions has been replicated around the world after it was brought in during the 1980s by then -dictator Pinochet, but opponents have long criticized the system for putting the interests of for-profit companies over that of older citizens, many of whom have spent their entire working lives contributing to.

The proposed bill would also offer pensioners more choice in their investment funds which are dominated by private providers known as AFPs. Currently, workers are forced to deposit a part of their wage plus administrative fees into private accounts, which supposedly go back into the country’s economy.

RELATED:
Chile Must Reciprocate Israel's Travel Ban says Barred Activist

Recently, however, pensions have taken a hit amid the country’s slowing economy, leaving many with next to nothing to make ends meet. Throughout 2016, anger against the pension system as well as the country’s prohibitive education system has spilled over into large protests from workers and student groups. Pinochet also helped to tear down the country’s public education in 1981.

“We must advance toward a truly mixed social security system, where all play their part, where solidarity comes from personal effort, where the state and employers play their corresponding role,” Bachelet said while announcing the change.

The pension system along with education reform is set to be a key part of this year’s election campaign, where voters go to the polls in November.

Comment
0
Comments
Post with no comments.