Chileans Take to the Streets to Reject Current Pension Model

Thousands of Chileans rallied Sunday nation-wide to object the country's current pension system, emphatically demanding that “Chile deserves to age with dignity".

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The march was organized by "No + AFP", which as its name indicates calls for the end of the privatized model, based on the individual capitalization of pensions run by the Administrators of pension funds (AFP). 

Chileans in Valdivia, Antofagasta, Iquique, Temuco,Castro, Copiapo, Concepcion, Punta Arenas, Valparaiso, Cauquenes, Santiago, among other localities joined to demand that it be replaced for a solidarity-based distribution model financed between workers, employers and the state. 

"We do not have a solidarity system. The quality of life of the elderly is not good, some are even taking their own lives, that is why we are here saying clearly 'no more AFP'", exclaimed Chilean lawmaker Karol Cariola, adding that the current systems weight falls solely on the worker, thus a tripartite public system would contribute alleviate this pressure. 

The Chilean pension model was established in 1980, during the dictatorship of Augusto Pinochet (1973-1990), and designed by the Chicago Boys economic team. It ’s based on a compulsory individual saving through which each worker contributes 10 percent per month of his gross salary to a personal pension fund which may be available when retiring and which is managed by the AFPs. 

These private run firms invest the people’s pensions in the stock market. In Chile, it is mandatory to be affiliated with any of the current six AFPs, which compete to attract workers based on their investment portfolio and the commission they charge as maintenance.

The average monthly pension paid in January 2019 by the AFPs was about US$ 236, while Chile’s minimum wage is about US$ 456. In October 2018, President Sebastian Piñera announced a reform that seeks to increase by four percent, gradually and at the employer's expense, the contribution in the savings accounts of the workers. 

However, the only current participation of the Chilean State is the so-called Solidarity Pillar (Pilar Solidario), a program aimed for the most disadvantaged classes and those with the lowest pensions. Yet this is not enough, as the model in itself is unsustainable and unjust, as protestors insist. 

“One of the models that really harm the welfare of workers is that of private pension management companies, among which the Chilean system is one the most brutal”, spokesman for No+AFP, Luis Mesina, said during the rally. 

Something two Nobel Prize in Economics winners also agree upon. Paul Krugman thanked “God, the U.S did not adopt the Chilean model of private pension funds”, as with Joseph Stiglitz assured that "with the Chilean AFPs only the financial sector won."

The No + AFP platform began to organize mobilizations in 2016. On March 14, 2019, it presented a draft bill that was handed out to parliamentarians, proposing the creation of a system of pensions financed by workers, employers and the state.