Pinera to present pension reform in first half of 2018

SANTIAGO – Chile’s Conservative President-elect Sebastian Pinera will present a proposal to reform the South American country’s pension system to Congress in the first half of 2018, one of his future ministers said in an interview published on Saturday.

Nicolás Monckeberg, who will assume the role of Labor and Social Security minister when Pinera and his cabinet take office on March 11, told newspaper La Tercera that Piñera “asked us to work for our country to regain confidence, and by regaining confidence we are able to start the economy and create good jobs.”

One of the priorities, Monckeberg said, has to do precisely with a pension reform. In this regard, he said that “today in Chile a reform of the pension system is urgently required, because pensions are insufficient, low, especially for the middle class, women and the most vulnerable sectors, and because our country is aging accelerated.”

The future Minister of Labor, Nicolás Monckeberg, hopes “that the political forces will agree to ensure that our pensioners have decent pensions.”

During last year’s campaign, Pinera – a billionaire who served as president from 2010-2014 – promised to strengthen the system through a $700 million boost to the state’s annual contributions, along with increases in employer contributions and incentives for workers to delay retirement.

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The future minister explained that Piñera’s government program “has a proposal that increases pensions gradually, taking into account the retirement age of people, up to 40 percent.”

Monckeberg said the proposal would incorporate some elements of a reform plan presented by outgoing socialist President Michelle Bachelet, including measures to increase competition between private pension fund administrators, known as AFPs.

The pension system of individual contributions through AFPs was launched during the dictatorship of Augusto Pinochet in the 1980s, and many retirees complain that payments are too small.

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Chileans took to the streets on numerous occasions during Bachelet’s administration to demand improvements, and some advocated for the elimination of the private system through the “No More AFP” movement.

“The era of the ‘No More’ has passed and we should move on to the stage of ‘Yes More’ with positive proposals to increase pensions,” said Monckeberg, who said he was open to creating a state-run AFP to help boost competition.

He also ruled out raising the retirement age, as suggested by the Organization for Economic Cooperation and Development (OECD): “It is not in the Government’s program to increase the retirement age of women, but what we do consider are incentives for those workers who voluntarily want to extend their working age, can do so through additional benefits.”

Regarding the date of entry of the project, Monckeberg said they expect “to do so in the first half of this year.”

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“From March 12, we will begin all conversations with the parliamentarians to build an agreement that allows us to enter a pension reform project that give our retirees stability and dignity,” he added.