Boric proposes a reform to increase pensions for the elderly in Chile

The president of Chile, Gabriel Boric, presented to Congress on Wednesday a project to reform the current private pension system and transform it into a model with the participation of the State and employers, in order to increase the amounts delivered.

“Today we present a reform, long awaited and postponed for more than 15 years, that creates a mixed system that will guarantee better pensions for all. The current system is in crisis and the amounts are not enough for people to sustain a decent life in their old age,” reported the president in a televised speech.

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Gabriel Boric explained that the reform ends the current system called Pension Fund Administrators (AFP) and creates new state and private investment managers, promoting competition through the entry of new actors.

The financing of this new system is made up of three pillars: the first, through the individual contribution of workers through mandatory contributions; the second, with fiscal funds, and the last, with a contribution by employers.

This last pillar, paid by companies and employers, is equivalent to 6% of the worker’s salary, and would be, according to the Chilean president, the tool that will allow, ultimately, to increase future pensions.

“This 6% paid by employers will improve everyone’s pensions, as it will function as a new social security and will allow, for example, to cover pension gaps [time not worked] for those who become unemployed,” Boric said.

The president asked Congress to start the debate quickly and invited all the actors to participate in the discussion: businessmen, political parties, AFP directors and workers.

“I make a direct call for a debate with responsibility and dialogue, but without delay, that puts people and their needs at the center,” he said.

The AFP private pension system was created during the dictatorship of Augusto Pinochet (1973-1990) and since then various attempts have been made to reform it, without any of them achieving an agreement.

With information from Sputnik