Chile: Bachelet’s Reform to the Pension System won’t Address the Main Problem

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Photo Credit: resumen.cl
Photo Credit: resumen.cl

Source: Resumen.cl / The Dawn News / April 13, 2017

In a pompous speech broadcasted through national TV, the President of Chile, Michelle Bachelet, announced the much-awaited reform to the pension system.

Regrettably, the proposal presented by the government is fundamentally focused on the additional 5% that will be paid by employers, without making the reforms that the people demand.

The government proposes to increase the value of current pensions by 5%, and charge that to the employer (who will pay with profit produced by the workers themselves). This increase would begin to be applied in the next 6 years “to guarantee a better transition”, Bachelet said.

The administration of that 5% “will be handled by a public, autonomous entity, with strict rules and high professional standards, so that nobody can question its efficiency, transparency and independency”, Bachelet felt the need to clarify, since people are getting tired of the fact that the government rules for the benefit of private companies.

Of that 5%, 3% will be deposited in a personal account and 2% will go to a Collective Savings Insurance.

But the core of the issue, which is the fact that pension funds are administered by private companies that have hurt the interests of retirees for the sake of profit. The government’s only proposal in this regard is to decide on investments and sort out conflicts of interest through state participation in the election of the board-members of pension companies. Which is to say, a superficial appearance of democracy that doesn’t affect the model of the system at all.

 

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