President Gabriel Boric signs a pension reform law aimed at transforming Chile’s retirement system, which will be operational by 2025 and fully implemented by 2035. The reform includes mixed contributions from workers, employers, and the state to improve pensions for millions of seniors, addressing previous shortcomings of the current AFP system. The reform represents a significant step forward in equity and collaboration across political factions.
Chilean President Gabriel Boric Font officially enacted a significant pension reform law on Thursday, which modifies the existing retirement framework established during the military dictatorship of Augusto Pinochet (1973-1990). The law will come into effect in September 2025 and aims for complete implementation by 2035. It introduces a mixed pension system funded by worker contributions (10%), employer contributions (8.5%), and a state-backed social security component, projected to enhance pensions for 2.8 million seniors by 14% to 35%. This addresses the current inadequate payouts from privately-managed Pension Fund Administrators (AFPs) which average about US$ 350 monthly for many retirees against a minimum wage of US$ 500.
The enactment of this pension reform law marks a pivotal advancement in Chile’s social security framework, seeking to rectify decades of gender disparities and inadequacies. It establishes a mixed funding model, significantly raises pension levels, and reflects a rare political consensus across party lines. This reform not only fulfills a longstanding demand for fairer pensions but also indicates Chile’s commitment to improved social equity as part of its ongoing democratic evolution.
Original Source: en.mercopress.com
