The system installed under the dictatorship

For those who want to observe the characteristics and main direction of the current pension system, it is a model that obliges workers to save, gathering with this money a fund that goes to a private administration system (AFPs) who have assured, in all events, their operating charges, independently of the results of their financial administration, in the speculative financial system.

These funds, month after month, place substantial flows of fresh, real money in the hands of the corporate and banking elite. In other words, workers finance the operations of the country’s rich people, in a legal criminal set-up. And as for the false promises of such a project, where the workers will supposedly receive at the end of their work, a pension close to 90% of their last salary; the reality is that the pensioners receive monthly payments of hunger and in the short term, they receive nothing, forcing the State with direct contributions to badly improve such a crisis, covering the failure of the private system, but maintaining what has always been its main objective: to finance the economic projects of the elite.

Current social welfare

Social welfare in recent times has not managed to improve the condition of people in general, considering the formulas of the PFAs, which with their negative results in the multiple funds, it is the member himself who must accept the losses of his money and not the PFAs. Moreover, people at social risk do not receive what they need, because the very system driven by the elite means that, of the billions collected in taxes, only a small part goes to social security. The very low pensions compensated by the State are compensated by the annual readjustment of the CPI; the universal pension (PGU) is a benefit for everyone over 65 years of age, supposedly assuring the improvement of the quality of life and dignity of people in old age, but this does not guarantee life, but only their survival. This causes progressive over-indebtedness, due to the illusion of the neo-liberal system itself, which makes people believe that they should be happy, ensuring consumption and not the life of those who are disabled or old.

In short, right-wing positions in Chile are characterized by maintaining the focus on individual savings as a discourse, replacing a collective system; guaranteeing “ownership of the funds”, dismantling the necessary solidarity in the generational dynamics of society; “preserving freedom of choice”, which should be read as support for the maintenance of the harmful and ineffective AFPs; and strengthening the Solidarity Pillar through the Universal Guaranteed Pension, that is, legalizing the embezzlement of private entities and covering up its consequences with state contributions. Therefore, when we listen to them proposing improvements to increase equity and quality of life for pensioners, we only hear falsehoods.

The proposal of the Boric government

The Boric government announced that it seeks to improve pensions in Chile through the “Better Pensions for Chile” proposal. In this proposal, it emphasizes the objective of improving the quality of life of citizens. The pension reform presented considers strengthening the Basic Solidarity Pension (PGU), increasing its coverage and amount to 250,000 pesos, and incorporating pensioners from reparation laws.
It will be proposed the creation of Social Security with a new contribution of 6% to be paid by the employer. It opens the legislative debate to proposals regarding the destination of this additional contribution (individual accounts and/or Social Security). It also promotes a pension with a guarantee of 0.1 UF per year of contribution, allowing, according to him, an increase in current pensions; in addition, it includes additional bonuses for women and other complements.
The reform also contemplates “the protection of individual savings” (10% of the worker), reducing costs and strengthening “the capacity to choose” between public and private administrators. The president urges to reach an agreement with the right wing and requests them to vote the Pension Reform that the executive is proposing to the National Congress; in a verbiage that we know is useless, because the right wing is opposed, they are the majority and the government knows it.

The political situation in parliament regarding the law

The issues to be defined in a Congress dominated by the right-wing are the increase of the contribution by 6% and its distribution; the end of the failed AFPs and the emergence of a Public Administrator; the legal characterization of the corporate governance of the Public and Autonomous Pension Investor (IPPA); the Universal Guaranteed Pension (PGU); Longevity Insurance; returns and the reduction of operating commissions.

The only certainty is that the members of Congress remain in their trenches bombarding with justifications to be able to sustain their vote, the right-wing against legislating or reforming, there being empirical evidence of the great difference between those who retired through the IPS (those who managed to avoid the forced change to the new system) and never changed and those who retire through the AFP. The scam of the century is the AFP in Chile, where 72% of pensions are lower than the minimum wage and one in four retirees only has a pension below the poverty line.

Simultaneously to this “debate”, the military pension system is financed, and in practice torturers, murderers, and human rights violators have pensions of over 2,000,000 pesos and more, financed by the taxes of all Chileans, and not one congressman has spoken out to denounce this inequity.
It is not valid that the congressmen continue from their political trenches fighting because they are needed in the district to collect the daily needs of ordinary people.

Dignified proposal from the grassroots of social movements, NO MORE PFAs

Proposal for a New Pension System: Replacement of the AFP Model. We will be proposing a pay-as-you-go and solidarity-based system to replace the current model of individual capitalization of the AFPs. Financing would be tripartite, with contributions from workers, companies, and the State, in addition to the creation of a Technical Reserve Fund for capitalization. The transition from the current system would be gradual.

The pay-as-you-go system seeks solidarity between generations, transferring part of the wealth of active workers to pensioners. Annual financial balance is guaranteed and a Technical Reserve Fund is incorporated to ensure the payment of obligations in periods of financial stress.

Replacement of the Basic Solidarity Pension by a Universal Non-Contributory Pension, covering 100% of the minimum wage.

Technical Reserve Fund: Integration of the State Pension Reserve Fund and the Fund managed by the AFPs. The initial capital of the system of US$223,653 million (calculated in 2021). The objective of ensure compliance with obligations in the long term and during periods of financial stress.

Ethical and socially responsible investments: Restrictions on investments that are anti-union or harmful to the environment and gender equity. Avoid speculative or high-risk investments. Inspection and condemnation powers against social security evasion. Seizure of assets and rights of the patrimony destined exclusively to benefits and social investment of the system (see from page 12 in the following link).

Collaborators: Ricardo Lisboa Henríquez; M. Angélica Alvear Montecinos; Guillermo Garcés Parada; Sandra Arriola Oporto and César Anguita Sanhueza. Public Opinion Commission