SANTIAGO – Chile’s private pension system has come under fire again, months after being at the center of a heated national debate since last July, with former president Ricardo Lagos calling for ‘decent pensions’.
The private pension fund managers, called AFPs, are accused of charging high administration fees and only providing good pensions for high-income individuals.
Thousands of people took it to streets last year, calling for a return to a pay-as-you-go system.
As of November last year, 69.5% of pensioners received monthly pensions below the minimum wage of 264,000 pesos (US$392), while just 2,378 individuals – 0.4% of total AFP pensioners – received more than 640,000 pesos, according to figures released by sector regulator.
Large contribution gaps is a major source explaining the poor performance of the so-called AFP system as those receiving less than the minimum wage have contributed less than 25 years to the system.
The figures also show that 78.8% of women received pensions below the minimum wage.
Taking on the AFP system, former president Ricardo Lagos said:”I support decent pensions. The current AFP system can’t be tolerated any longer, and for as long as it doesn’t change, not a peso more for the AFPs.”
Chile will hold presidential elections on November 19 and Lagos has expressed his wish to lead the country again.