Experts hope to know details of the initiative, but they emphasize that Chile already It has a mixed system and they do not close the debate on how to finance solidarity.
Although many details remain to be known, The Government has already delivered the main points of its long-awaited pension reform proposal, which introduces changes to the industry and adds an additional component.
What is the proposed structure? A system where the base will continue to be the Universal Guaranteed Pension, where -in fact- it is expected to increase the amounts, through the tax reform.
The second pillar will continue to be the individual capitalization component, with a contribution of 10.5% from each worker, where a change has already been introduced: the management of the accounts is the responsibility of a state body, but the administration of the investments election.
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The AFPs as we know them until now are finished, they are transformed into private investors, and they will compete with state investors.
The second great modification of this project: a 6% additional contribution, which -in this case- will go to a “social security” account.
With this change in the structure, the economist David Bravo, who chaired the last presidential commission on this matter, says that Chile is closer to models like Sweden’s, but that the “mixed” nature of the model had already been achieved with the past reforms.
The main change has to do with the distribution of this additional 6% contribution , a long-standing discussion in Chile, where the closest thing to an agreement was allocating 3% to solidarity.
In this case,everything is redirected to a distribution component but, In a notional logic, it recognizes the individual savings of each contributor, but mainly benefiting the lowest pensions and women.
For this reason, the Minister of Finance, Mario Marcel, responded to the criticism by pointing out that the discussion must be put in its context, where it is essential to correct the inequalities of the system.
On the other hand, the former Minister of Finance, Ignacio Briones, also commented on the project, saying that the importance of a solidarity component is NOT in doubt, but the formula must be discussed.
In his opinion, the contribution charged to the employer continues to be a balance paid by the workers, and it is worth discussing whether a more appropriate formula is financing from the PGU.