Boric announces a pension reform and leaves the administration of

Boric announces a pension reform and leaves the administration of the funds to the state

A law change has been awaited in the country for 15 years and has recently suffered two failed attempts; The final decision will be made by Congress, where the Chilean President’s party does not have a majority

JUAN BARRETO / AFPBolsonaro insults the Chilean President
Gabriel Boric is Chile’s leftwing president

the President of Chile, Gabriel Boricannounced this Wednesday, 2, its promised social security reform, which provides for the creation of a mixed model with an increase in the contribution to be paid by the employer from 10% to 16% and the possibility of the state managing the funds. Subsidiaries “will own their savings and will be free to choose between private investor managers or the public investor,” the President explained. Boric explained that the system consists of three pillars: the current individual capitalization, which maintains compulsory contributions for each employee; That 6% social security contribution, which is paid by employers; and the contribution of the country through the Universal Guaranteed Pension (PGU). The latter will increase to 250,000 pesos (about R$1,360) with this reform once Congress approves the tax reform.” The AFPs (Private Pension Fund Administrators) end up in this reform. There will be new private investment managers with the sole aim of investing in pension funds, and on top of that there will be a public alternative that encourages competition by attracting new players,” explained Boric.

The head of state insisted that “the current pension system is in crisis” and that current pensions are “insufficient” for people to “live a decent life in old age, no matter how hard they have worked in life”. “There have already been two failed attempts in recent years, and the public will not forgive another political failure,” he reiterated. Boric, recalling that this reform “has been expected and postponed for more than 15 years”, invited parliamentarians, employers, AFPs, workers and organizations to “feed” the debate that will eventually be defined in Congress, where his party a majority did not do this. .

*With information from EFE