Latin America's Most Disliked President Kicks Off Pension Reform
29m ago
Eduardo Thomson, Bloomberg News
(Bloomberg) -- President Sebastian Pinera is forging ahead with plans to overhaul Chile’s pension system as he seeks to appease mass protests that have battered the economy and sunk his approval rating to a record low.
The government will send this week a bill to Congress requiring employers to contribute to workers’ individual savings accounts and also to a broader solidarity fund aimed at boosting pensions of the middle class. The proposal also increases competition among private companies, known as AFPs, that manage the savings accounts, Pinera said late on Wednesday.
Pinera’s announcement comes as his approval rating plunges to an all-time low of 6% after three months of demonstrations against inequality rocked the country. Improving pensions that sometimes fall short of Chile’s $400 monthly minimum wage has emerged as a central grievance among protesters. The president’s low level of support may give him no option other than heeding those demands, according to Claudio Fuentes, a political science professor at Universidad Diego Portales.
“The last survey confirms a demand for major transformations in conditions of living,” he said. “With an approval of just 6%, the government will have to side with groups that are more favorable to social reforms.”
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Pinera’s Brother
Chile’s current pension system was designed by Pinera’s older bother, Jose Pinera, and implemented during the Augusto Pinochet dictatorship. It obliges workers to deposit 10% of their wages in the AFPs, many of which are owned by foreign groups such as U.S.-based Metlife Inc., Prudential Financial Inc., Principal Financial Group Inc., and Colombia’s Grupo de Inversiones Suramericana SA.
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