Chile: the new president expected on the pension reform
Audio 03:35
Retired working as a street vendor, in November 2019, in Santiago de Chile.
AP - Esteban Felix
Text by: RFI Follow
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In Chile, the new president Gabriel Boric, sworn in last week, will gradually begin to implement his roadmap.
He was elected on a very social program and one of the major reforms expected by Chileans is that of pensions.
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with our correspondent in Santiago
,
Naïla Derroisné
In Chile, the current model, inherited from the Pinochet dictatorship, is highly criticized.
It is based on an ultra-liberal system in which the pensions of retirees are subject to the laws of finance and where the State is absent.
Moreover, according to a recent opinion poll, the Chileans believe that the new government should deal with this file as a priority.
In the center of the capital, Aurora Arancibia, 72, lives with her husband in an old house at the end of a small alley.
Aurora worked for forty years, most of the time as a civil servant.
“
I was a secretary in a town hall and I was really paid the minimum!
“, she notes.
It is because of this low salary that today his retirement is only 280 euros per month.
“
We spend a lot to buy our medicines.
And there are the basic expenses: electricity, water, gas.
These are the limits that cannot be exceeded.
We have already been on vacation, but for that we had to go into debt
, ”she says.
In Chile, it is the AFPs, administrators of private pension funds, who manage pensions.
A system established under the dictatorship and to which Luis Mesina, spokesperson and founder of the “Stop the AFP” movement, is totally opposed.
“
This model is not based on social security.
It is an individual account system with capitalization for each individual.
There is no intergenerational solidarity.
There is no redistribution unlike countries that have adopted a social security system
,” he explains.
According to Luis, 72% of retirees have less than 22,000 euros in their savings account.
“
With this money, they can self-finance a pension equivalent to 56 euros per month.
This is 7 times less than the minimum wage.
»
Benefits gained
By making investments with the money saved by the Chileans, the AFPs make a profit.
But these financial transactions are sometimes risky.
So when he was elected, the new president,
Gabriel Boric
made a promise.
“
The AFPs in Chile are today earning insane sums in view of the price of the work of Chileans and Chileans.
AFPs are part of the problem.
We will defend a public, autonomous, non-profit and AFP-free system!
“, he had declared.
►Also read:
Chile: why the new President Boric wants to reform the pension system
But since this speech, Luis Mesina has seen a change in position on the part of the new president and his team: “
They have changed their strategy and their proposal.
This challenged us and we are concerned today because in this country, if there is no fundamental change, if there is no real solidarity component in the security system, the reform will have no future.
»
The new government could present a mixed system, between public and private.
This is what Guillermo Larraín, professor of Economics at the University of Chile and teacher at Science-Po Paris, thinks.
He participated in discussions on pension reform during the election campaign.
“
Basically, it's a reform that proposes to create, from what we have today, a real social security system.
We keep the ability to create savings at the individual level, but we strengthen the current system with a universal pension, truly universal, for everyone, financed with taxes.
And the creation of a new system, financed by employer contributions.
Chile is the only OECD country where there are no employer contributions.
And from this contribution, we create a social security system
, ”he describes.
The liberal right
and the AFP will certainly oppose this reform.
Just like the radical left who will want a 100% pay-as-you-go system.
Aurora, on the other hand, asks for only one thing.
“
I want a better future for my grandson.
We have faith in Gabriel Boric and a lot of hope!
", she says.
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Chile
Gabriel Boric