Chile´s Pinera announces new reforms to criticized pension system

To help fund the changes, Pinera has proposed boosting competition, transparency and more tightly regulating the private pension fund administrators that manage citizens' retiremennt investments. Pinera´s announcements tweak a previously announced reform that had floundered in Congress, and follow the introduction of an opposition-sponsored bill that would allow citizens a third withdrawal from their pension savings.


Reuters | Santiago | Updated: 04-03-2021 18:19 IST | Created: 04-03-2021 17:58 IST
Chile´s Pinera announces new reforms to criticized pension system
Representative image. Image Credit: Twitter(@sebastianpinera)
  • Country:
  • Chile

Chilean President Sebastian Pinera late on Wednesday announced a new plan to overhaul the country´s heavily criticized pension plan, even as opposition lawmakers pushed a bill to allow a third withdrawal from savings amid the lingering coronavirus crisis. Chile´s privatized pension system, introduced under dictator Augusto Pinochet, has been hailed by some economists as a model, but has increasingly come under fire for meager payouts. A pension overhaul was a principal demand of protesters during widespread riots in 2019.

Pinera´s plan would extend the reach of a government-subsidized pension top-up to cover the middle class, increasing that assistance from 60% to 80% of the population, and boost coverage for women. The reform will "improve the pensions of all retirees, current and future, and especially of women, the middle class and the most vulnerable sectors," the president said in a televised speech late on Wednesday.

The plan would assure that even the base-level "solidarity" pension remains above the poverty line. At the same time, his plan guarantees those that have paid into the system for 30 years or more, including contributions to a solidarity fund, would receive a pension equal to or greater than the minimum wage. To help fund the changes, Pinera has proposed boosting competition, transparency and more tightly regulating the private pension fund administrators that manage citizens' retiremennt investments.

Pinera´s announcements tweak a previously announced reform that had floundered in Congress, and follow the introduction of an opposition-sponsored bill that would allow citizens a third withdrawal from their pension savings. Pinera has long argued that early withdrawal from the system jeopardizes the long-term pensions of the poorest Chileans, and offer a tax-free windfall to rich people who do not need it. His opponents say Chileans need economic help now.

 

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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