The first report of the study group “Better Pensions for Chile” was published at the end of November, 2016. The group was convened by the Economist Salvador Valdés, researcher of the Latin American Center for Economic and Social Policies (CLAPES UC), which provides essential academic and administrative resources. The group is independent, transversal, and covers several disciplines.

This first report offers an overall view for understanding citizens’ demands for improving pensions in Chile. The proposals include the following, among others:

• New institutional design that considers: (a) Fund Ownership Committees for each AFP, with specific powers; (b) Make clear to citizens the difference between a real pension and a mere return of contributions.
• To improve the current pensions of vulnerable individuals: (a) Support a 10% increase in the basic solidarity pension over and above the variation of the CPI, and increase the Maximum Pension with Solidarity Contributions (PMAS) by 10%; (b) Prevent accumulation of gaps in real future adjustments of the Solidarity Pillar, based on future adjustments in the variation of the GDP and wages (not on the variation of the CPI).
• To improve the current pensions of the middle class: (a) End the discrimination between pensioners who currently have different effective minimum pensions, but belong to different systems; (b) Study alternatives for reducing the interest rates on consumer loans to pensioners; (c) Improve pensions by means of a battery of specific programs that repair the flaws in the pensions policy that have led to pensions that are too low for any specific sector (rather than an almost universal subsidy, fiscally unviable and regressive); (d) Allocate at least 4 percentage points of the total proposed increase in the contribution rate (of 5 points, financed by the employer) to the individual accounts of workers.
• To improve future pensions: (a) Gradually reduce the contribution exemptions of the self-employed middle class, assigning assumed income to haulage contractors, fishermen, activities requiring municipal licenses and fee contractors; (b) Ensure the collection of contributions through the judicial collection (by law) by the Treasury General of the Republic (pre-judicial collection is maintained in the AFPs); (c) Create an “Autonomous Actuarial Council” to gradually adjust the minimum normal legal retirement ages, considering the technical data of the mortality tables.

To review the report in detail, please download it here.