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News > Latin America

Chile Social Movement Holds Plebiscite on Pinochet-Era Private Pension System

  • The pension does not allow retirees to live in dignity, claim the citizen movement NO+AFP.

    The pension does not allow retirees to live in dignity, claim the citizen movement NO+AFP. | Photo: Courtesy of Alex Saphier Herrera

Published 28 September 2017

“Our grandparents are living in misery, they can't make ends meet at the end of the month,” said Saphier, a union leader in an exclusive interview with teleSUR.

Chilean voters will give their opinion on the country's private pension system in an unprecedented plebiscite organized by national citizen movement, NO+AFP, which translates to "No More AFP."

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For over three years, workers and citizens in Chile have mobilized for their right to a decent pension, demanding the state improve the current system which was implemented during the dictatorship in 1980.

But the government has refused to reform the system — despite mass protests of over 2.5 million people — agreeing only to increase the minimum of the basic pensions that all Chileans are entitled to.

This weekend, however, Chilean voters will have the chance to formally vote for a new pension system.

“The plebiscite is a historical initiative in the history of the Chilean Republic,” Alex Saphier Herrera, coordinator and spokesperson for the local branch of the labor union NO+AFP in the province of Osorno, told teleSUR.

“This is the first plebiscite called for by citizens, with citizens proposing their own agenda, needs, and claiming lost rights — the right to social security,” he said in a telephone interview.

The NO+AFP movement has been coordinating and promoting the plebiscite at the national level. It does not receive funds from political parties, nor the government — only from labor unions and citizens.

“We hope that the turnout will be high — as a comparison, the primary elections ahead of the presidential elections had an unprecedented level of participation with about 1.5 million voters, out of 15 million voters. We hope to reach about the same turnout, or even more.”

The current pension does not allow retirees to live in dignity, says Saphier. Some workers receiving about 63,000 Chilean pesos — much less than what the system promised them in the beginning, he added.

“The current system is totally unfair,” said Saphier, “workers were forced to adopt it.”

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“Today a Chilean worker receives about 130,000 Chilean pesos for the minimum pension, while the minimum wage is over 200,000 pesos — that's a huge difference. Our proposal is to allocate the minimum wage to any pensioner.”

“Our grandparents are living in misery, they can't make ends meet at the end of the month, that's why the movement has received so much support from citizens.”

Almost 40 years after it was implemented, the system of individual saving has failed to meet three of its initial promises, including, the hope that major companies in Chile could use the pension fund to invest in the national economy.

“This system has maintained huge inequalities in salary, with an index of social and economic inequality that has ranked Chile among the worst countries in the Organization for Economic Co-operation and Development,” said Saphier.

Workers were promised a rate of return of about 70 percent of their wage when they retired, but they only receive 20 to 30 percent of their wages.

The system was also supposed to function without public spending, but the state currently contributes 4.1 of Gross Domestic Product to sustain the pensions.

In August, the mounting public backlash forced the government to slightly modify the system. The new plan was inspired by the NO+AFP movement but maintained the basis of the system inherited from the dictatorship — an individual saving model.

The revised proposal did not include the principle of solidarity and collective effort implemented in most countries of the world.

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The No+AFP proposal, on the contrary, was designed by academics, economists, sociologists and various foundations.

Under the No+AFP system, pensions would be funded by three entities: the state, workers, and companies.

It would also include a technical reserve fund to be used to invest in social initiatives and develop the country's productive matrix. The goal, explains Saphier, is to create a system that mitigates the effects of the aging population and remain sustainable.

The pensions of retirees would be funded by active workers, but active workers would be only one of the three funding pillars of the system, as recommended by the International Labor Organization: “The ILO recommends that workers should not participate in more than 50 percent of the pension funds — while they participate 100 percent in Chile now.”

The initiative also aims to generate a culture of citizenship, explains Saphier, so citizens can feel that they can participate in the decision-making processes that have an impact on their daily lives.

The individualistic pension system was introduced in the context of the dictatorship and violent repression, and has since then remained in the collective subconscious. This has made the 40-year fight for the right to social security so difficult to achieve, says Saphier.

But with the recent “march of the penguins” and student rebellion over education rights in 2006, people in Chile have started to mobilize again in the streets and demand their rights.

Chilean voters living abroad will be able to participate in the vote on Sept. 29, 30 and Oct. 1 thanks to the online platform http://www.plebiscitopensiones.cl/.

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