Chile Overhauls Pension System in Historic Reform
Chile's Congress passed a significant reform of the private pension system, increasing employer contributions and the minimum guaranteed pension. This overhaul, a cornerstone of President Boric's campaign, aims to address systemic inequalities and is designed to foster economic growth despite concerns about rising labor costs.
![Chile Overhauls Pension System in Historic Reform](https://devdiscourse.blob.core.windows.net/imagegallery/27_06_2019_18_41_29_2135076.png)
In a landmark decision, Chile's Congress approved a sweeping reform of the country's private pension system, fulfilling a pivotal campaign promise by President Gabriel Boric. The reform, which received 110 votes in favor and 38 against, is poised to be signed into law by Boric.
Central to the changes are increased employer contributions and a higher guaranteed minimum pension, marking a significant shift from the system established in the 1980s under the Pinochet dictatorship. This move comes after widespread protests against inequality and previous criticism of the low payouts and profitability of Chile's Pension Fund Administrators (AFPs).
The reform introduces a new social security system aimed at correcting systemic inequalities, including the gender gap, and opens the market to new pension fund administrators. Although the increased employer costs may lead to job losses, Finance Minister Mario Marcel believes the boost in savings will drive economic growth and job creation, balancing the negative impacts.
(With inputs from agencies.)
ALSO READ
Malaysia’s Inequality Challenge: Pathways to Inclusive and Equitable Growth
Malaysia's Path to High-Income Status: Addressing Inequality and Enhancing Economic Mobility
Urgent Call to Tackle Rising Income Inequality
Tanzania's Fight Against Inequality and Poverty: Key Insights from the Latest Report
Digital Jobs and Gender Inequality: Lessons from Mozambique’s Labor Market