President Gabriel Boric signed a pension reform law in Chile, changing a system that dates back to the Pinochet era. The law introduces a mixed pension model to increase payouts for 2.8 million seniors and tackle gender disparities. It was approved after years of failed attempts and reflects a rare bipartisan agreement. This reform is seen as a major victory for Boric’s administration as he nears the end of his term.
Chilean President Gabriel Boric Font signed a significant pension reform law, marking changes to the existing retirement mechanism established during Augusto Pinochet’s military rule. The law will take effect in September 2025, with full implementation expected by 2035, introducing a mixed pension system that includes contributions of 10% from workers and 8.5% from employers, alongside a state-backed component. This reform aims to increase pensions by 14% to 35% for approximately 2.8 million seniors, addressing the limited pensions currently received, which average around $350 monthly against a minimum wage of $500.
The government highlighted the reform as a crucial advancement in pension policy over the past decades, introducing a contributory social security framework and enhancing the Universal Guaranteed Pension while offering benefits for years of contribution and addressing women’s life expectancy. President Boric emphasized this collective achievement, stating that it reflects a collaborative effort across party lines, finally resolving a decade of attempts to reform the pension system with insufficient consensus.
The law also tackles gender disparities, acknowledges both paid and unpaid work, and fosters competition among Pension Fund Administrators (AFPs) by allowing public bids and new entrants, which should lower costs for workers. Boric described this reform as the most significant pension advancement in decades, as it transitions to a model that combines contributions from both workers and employers, aligning Chile with global practices.
Passed on January 30 after numerous failed attempts, the reform was made possible by a rare agreement with opposition factions, notably the center-right coalition Chile Vamos. Finance Minister Mario Marcel acknowledged the legislators from Chile Vamos for their willingness to work across political lines despite external pressures, emphasizing the importance of collaboration during this process.
The AFP system, established in 1981, has faced criticism for prioritizing the profits of administrators while failing to provide adequate pensions, leading to widespread protests. This reform represents a significant victory for Boric’s government, fulfilling a longstanding demand for a fairer pension system as he approaches his final year in office.
The recent signing of the pension reform law by President Boric marks a pivotal shift in Chile’s retirement system. It introduces a mixed pension model that includes contributions from both workers and employers, aiming to significantly raise pension payouts for millions of seniors. With a focus on equity and inclusion, this reform addresses longstanding issues like gender disparities and seeks to enhance overall competition among pension funds, demonstrating a collaborative political effort amidst a history of failed reforms.
Original Source: en.mercopress.com
