Boric launches bill to change Chile's pension system
Friday, November 4th 2022 - 10:32 UTC
Chilean President Gabriel Boric Font has submitted before Congress a bill to end the pension fund administrators system created under dictator Augusto Pinochet.
The mechanism currently in force created an individual capitalization method replacing the pay-as-you-go model. Each worker is deducted 10% of his or her monthly salary to a personal account managed by one of the seven existing Pension Fund Administrators (AFPs), which make huge profits after investing these savings in the markets, which amount to about 8% of Chile's GDP.
These funds are returned to the account holders when they reach their retirement age (60 years old for women and 65 years old for men).
But AFP investments are believed to have exclusively benefited the elites. On top of that, the system only works for those who have a stable job and a high income, something unthinkable for the vast majority of Chileans. In 2008, a reform was made and a state-financed pension was created, aimed at the poorest 60% who had never contributed or who received very low pensions. The state contribution was increased in 2021 to 185,000 pesos per month (US$ 200).
More:
https://en.mercopress.com/2022/11/04/boric-launches-bill-to-change-chile-s-pension-system