Chile's Pinera announces key pension fund reform after protests

AFP•January 16, 2020


Demonstrators run as a riot police vehicle sprays water during a protest against Chilean President Sebastian Pinera's government in Santiago on January 10 (AFP Photo/CLAUDIO REYES)More

Santiago (AFP) - Chile's President Sebastian Pinera has announced plans to reform the country's pensions system, a key measure aimed at easing the South American country's three-month old social crisis.

In an address to the nation late Wednesday, Pinera said he will send a bill to Congress this week that proposes a gradual increase of mandatory contributions from 10 to 16 percent, with employers contributing the increase.

The move "will mainly benefit women, middle class and older adults with severe dependence," Pinera said in the address.

A 2018 proposal to raise pensions by four percent was rejected as insufficient.

The new measures seek to improve the plight of cash-strapped Chilean pensioners who on average receive pensions equivalent to between 30 and 40 percent of their final salary.

The majority of pensioners have to live on around $400 a month in retirement, below the minimum wage.

Pinera's proposal comes almost three months to the day after the eruption in mid-October of widespread, often-violent social protests that left 29 dead and thousands injured.

One of the key demands of protesters was reform of the pensions system, managed by for-profit Pension Fund Administrators.

Pinera said that the reform would increase pensions by around $91 a month for women, and about $73 for male pensioners.

In the midst of the crisis in early December, Congress passed a bill proposed by Pinera to gradually increase minimum pensions by 50 percent.


Chile's Pinera proposes reform of pension system that has fueled protests

By Fabian Cambero, Reuters•January 15, 2020


FILE PHOTO: Chile's President Sebastian Pinera addresses the 74th session of the United Nations General Assembly at U.N. headquarters in New York City, New York, U.S.More

By Fabian Cambero

SANTIAGO (Reuters) - Chilean President Sebastian Pinera said on Wednesday that he will send a bill to Congress this week to reform the country's pension system, which leaves many retirees living in poverty and has been one of the main complaints of protesters in months of demonstrations.

In a radio and television broadcast, Pinera said he will propose a 6% increase in the pension contribution per worker.

Chile's pension system is a defined contribution scheme in which workers pay at least 10% of their wages each month to for-profit funds, called the Pension Fund Administrators (AFPs). The proposed adjustment implies a 3% increase in the employer's contribution.

In addition, employers would contribute another 3% to a state fund that would go toward improving current and future pensions.

The pension system and the AFPs have been harshly criticized in protests that began in mid-October and have left at least 27 people dead, thousands arrested and swaths of property damaged.

Many Chileans live on pensions that are significantly lower than the minimum wage, even if they have worked for most of their lives.

Pinera said the reform would mean that no pensioner will now fall below the poverty line and no one who has paid into the pension system for more than 30 years will be living on amounts below the present minimum wage.

"This new reform represents a structural change and creates a new pension system," Pinera said, adding that it will benefit a million pensioners.

Pinera, whose brother introduced the present system during the era of Augusto Pinochet, said soon after the protests began that he would increase the ambition of an existing pension reform bill making its way through Congress.

Pinera said that reform also opens the opportunity for new pension bodies to compete with the criticized AFPs.

In his address on Wednesday, Pinera said the reform would imply a "significant" cost for the state, without disclosing the figures.

(Reporting by Fabian Cambero; additional reporting by Aislinn Laing; writing by Cassandra Garrison; Editing by Leslie Adler)

Chile president launches health care reform project

AFP•January 5, 2020


Chile's President Sebastian Pinera has announced a raft of measures aimed at appeasing protesters and ending months of chaos (AFP Photo/HO)More

Santiago (AFP) - Chile's President Sebastian Pinera launched on Sunday a reform project to create a "universal health plan" following months of protests against social inequality and his leadership.

"This plan is based on what the people have asked us for," said Pinera as he presented the project.

A poor public health system and sky-high private costs were among the main gripes of demonstrators.

Congress sat on Sunday to deal with a number of projects as part of Pinera's "social calendar" aimed at appeasing protesters.

The new health plan would benefit the 14.5 million people who rely on public services as well as the three million using private care.

Congress has tried to rush through social projects to help defuse the protest movement that began on October 18, initially as a reaction to a modest metro fare hike.

Twenty-nine people have died during the worst social unrest to hit Chile since the Augusto Pinochet dictatorship ended 30 years ago.

One of Pinera's main policy changes has been to enact a law allowing the South American country to hold a referendum on changing the Pinochet-era constitution.

His new health plan will include "a guaranteed maximum waiting time (and) a drop in the price of medicines," as well as other changes, Pinera said.

He said the government would subsidize "the 200 main" medicines used for chronic conditions such as hypertension and diabetes, resulting in a 60 percent reduction in costs.

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