President Gabriel Boric signed a landmark pension reform into law, introducing a mixed system set to enhance payouts for retirees from 2025. The reform aims to correct gender disparities and improve pensions for 2.8 million seniors, representing a significant political collaboration over ten years of previous failures.
Chilean President Gabriel Boric Font has enacted a significant pension reform, addressing the retirement system that has been in place since the Pinochet era. Set to take effect in September 2025, the new law introduces a mixed pension system with contributions from workers (10%), employers (8.5%), and a newly established state-backed component. This initiative aims to enhance pensions for 2.8 million seniors by improving payouts, which currently average only US$ 350 monthly, far below the minimum wage of US$ 500.
The government underscores the reform’s significance as a landmark advancement in pension legislation, stating that it establishes a new social security framework, enhances the Universal Guaranteed Pension, and compensates women for longer life expectancy. President Boric highlighted the reform’s inclusive nature, noting its collective approval and collaboration across the political spectrum, stating, “This is a collective achievement. Its approval was transversal.”
Moreover, the legislation aims to eliminate gender disparities by acknowledging both paid and unpaid labor. It enhances competition among Pension Fund Administrators (AFPs) through public bidding and welcomes new entrants to the market, thereby reducing costs for workers. Boric emphasized that this reform could facilitate the largest pension increases in decades.
The law, which passed on January 30, overcame more than ten years of failed attempts through a cooperation agreement with parts of the opposition, notably the center-right coalition, Chile Vamos. Finance Minister Mario Marcel commended these lawmakers for their willingness to collaborate across party lines, reflecting a concerted effort to secure a fairer pension system despite political pressures.
The AFP system, introduced in 1981, faced criticism for leading to inadequate pensions while benefiting administrators. This reform represents a substantial victory for Boric’s leftist administration, marking a pivotal move towards a more equitable pension structure as he approaches the end of his term.
President Gabriel Boric’s signing of the pension reform marks a transformative step towards addressing long-standing issues in Chile’s retirement system, which had been criticized for its inadequacy. The reform, characterized by a collective political effort, aims to enhance pensions significantly and align contributions from both workers and employers, setting a precedent for future improvements. It represents a critical advancement in achieving a fairer and more equitable pension system for Chilean citizens.
Original Source: en.mercopress.com
