The President of Chile, Gabriel Boric, announced Wednesday that he will send Congress a proposal to reform the pension system that implies the end of the private administrators, the unpopular AFP, in favor of a mixed system with the participation of workers, the state and men. business.
In a televised message, Boric took the first step to finalize one of his greatest election promises: abolish the system created in 1981 by the dictatorship of Pinochet (1973-1990), a pioneer in the world in establishing the absolutely individual capitalization of the worker.
The reform of this system was one of the main demands of the gigantic protest movement of 2019.
For over 15 years, Chileans have been waiting for a reform, which has been thwarted in several attempts by previous governments. The president’s draft would arrive in Parliament next week, it was reported.
“The current pension system is in crisis and no one doubts it. Today’s pensions are not enough for our fathers, mothers, grandparents, grandmothers to sustain a dignified life in their old age, no matter how hard they worked during their lives.” the center-left president.
72% of the pensions received by the population are below the minimum wage, and one in four retirees receive an amount that is below the poverty line, said Boric, who also recalled in his speech that pension fund administrators (AFPs), which are now mandatory for Chileans, also earn ” if the results and profitability of the funds are negative “.
The proposal
proposes Boric instead a mixed pension system based “on principles of social security”, in which there are contributions from the state, employers (which would gradually contribute up to 6% of the current zero) and workers.
This would have a great impact in relation to current pensions. Today, for example, a person who paid a salary of about $ 425 during his working life receives a pension of between $ 275 and $ 285. But if Congress passed Boric’s reform, it would cost about $ 415, or 46 percent more for men and 52 percent more for women, according to the president.
The president stressed that retirement savings on individual accounts accumulated today and in the future will continue to be so individual property, inheritable and “never expropriated, how it works today ”, to clarify any “ghosts or fake news”, he stressed.
Furthermore, the system “will offer the freedom to choose who will invest their pension funds, an option that does not exist today”.
Pensions will recognize “housework and care” work that falls mainly on women in Chile, added the former student leader elected president a year ago. And he pointed out that women today do not see their work reflected in their retirements, which are usually lower than those of men.
“In this way the pension in case of maternity will be increased”, he remarked.
Boric acknowledged that the reform proposed by his government continues the work of those initiated in the second governments of Michelle Bachelet (2014-2018) and Sebastián Piñera (2018-2022).
The announced pension reform is subject to the president’s approval of the tax reform, rejected by the congress and still under discussion.
Also, it has to face the fact that Congress is the most divided since Chile returned to democracyand in it the governing coalition, Approve Dignity, has the lowest number of deputies and senators in recent decades.
Some of the deputies and senators of Approve Dignidad have been characterized by repeatedly voting against many of Boric’s proposals.
Source: AP and AFP
CB
Source: Clarin
