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Finally tonight President Sebastián Piñera announced the long-awaited changes to the pension reform.
In a national chain, the President said that they will put urgency to the project and enter an indication that includes the expansion of the coverage of the Solidarity Pillar, going from the current 60% of the most vulnerable population, to covering 80% of the population of the country.
“In this way, this reform is in charge of providing social protection to 480,000 middle-class pensioners, who today do not have the support of the State and only depend on their individual savings,” he said.
In that sense, he explained that with these changes “the Solidarity Pillar will protect and benefit more than 2 million pensioners.”
The second change announced by the President is an increase in the current Basic Solidarity Pension (PBS), “So that no pensioner has a pension below the poverty line”, said the President.
In this regard, he explained that “this increase directly benefits the more than 580,000 pensioners who receive the PBS. It also improves the Solidarity Pension Contributions (APS), which benefits more than 1 million pensioners. These increases will also benefit the 480 thousand people who join the Solidarity Pillar due to its increased coverage ”.
Although Piñera did not specify how much the PBS rises, according to a minute that has been socialized with parliamentarians, it would rise to $ 177,000 for all age groups. This compares with what Congress approved a year ago, which stipulates that in January 2022 all pensioners over 65 will receive a PBS of $ 169,649.
As a consequence of the above, the bill details that the Maximum Pension with Solidarity Contribution (PMAS) remains at $ 501,316 for the group between 65 and 74 years old, “thus equaling the value of the PMAS of all age groups,” the document states .
A third change announced by the President on Wednesday lies in anticipate the readjustment of pensioners between 65 and 74 years of age who are beneficiaries of the increase in the Solidarity Pillar approved by Congress a year ago, and that initially corresponded to January 1, 2022.
Additionally, the President insisted that the 6% additional contribution charged to the employer proposed by the reform, is divided into 3% to individual accounts, and the other 3% to a common fund. Precisely this has been the subject of conflict up to now with the opposition, since the latter want everything to go entirely to a solidarity fund.
Although the President’s announcement was expected for this past Wednesday noon, it was finally decided to suspend the ceremony that was scheduled for 2:00 p.m. at the Palacio de La Moneda. All of this occurred while the bill was being voted on in the Senate Labor Committee.
And yesterday there were also meetings: after noon the President together with the Minister of Finance, Rodrigo Cerda, met for more than an hour with parliamentarians from Chile We are going to explain the changes that would come. This, after the questions that arose from the official side, because they had not been informed about the modifications.
The President recalled that the increase in the Solidarity Pillar has already been approved, which has been underway since January 2020.
“The second stage of this pension reform improves the pensions of current and future pensioners, and especially, the pensions of women and the middle class. This reform was approved by the Chamber of Deputies in December 2019 and has been pending in the Senate since then. This delay has prevented improving the pensions of approximately 800 thousand pensioners, ”said the President.
Thus, he affirmed that “the time has come to move forward with determination and urgency in this second stage of the pension reform.”
The Head of State recalled that the 6% additional contribution currently proposed by the project will be administered by a public agency, called the Social Security Administration Council (CASS).
He also said that the 3% contribution that will go to individual accounts, under the regime “will increase the pensions of future pensioners by 30%.” And he was emphatic in pointing out that “these savings belong to the worker, are inheritable and will allow them to finance a higher pension.”
He also recalled that the other 3% will go to a new Collective and Solidarity Savings Program (PACS) and will finance various benefits that were agreed with the Chamber of Deputies a year ago.
Among them, an immediate increase of UF 2.7 UF in the pension ($ 79,135 per month) for current and future pensioners over 65 years old, but who have contributed at least 8 years.
And in the case of current and future male pensioners over 65, the increase corresponds to UF2 ($ 58,618 per month), but for those who have contributed for at least 12 years.
This solidarity fund will also give an increase in the pension for each year listed in the PACS, as announced last year. “For example, a female pensioner with 10 years of contributions in this new program, will receive as a result of these improvements an increase in her monthly pension of $ 90,859,” exemplified the President.
Additionally, the President recalled that “this reform guarantees all new pensioners, with 30 years of contributions and at least 10 years of contributions in the PACS, a pension equal to or greater than the current minimum wage, that is, UF 11.1, equivalent today at $ 325,330 ″.
The Head of State also commented on something that was already committed: dependency insurance, “which will give financial support to those over 65 who require help from a third party to carry out their daily activities,” he explained.
This insurance will finance an additional pension, increasing with the years of contributions and with a minimum of UF 3 UF ($ 87,927).
Those who do not have this new dependency insurance will be able to access a dependency subsidy, which will grant an additional benefit of between $ 60 and $ 80 thousand per month, to severely dependent pensioners.
Although this subsidy was already announced, there was a change: before the most vulnerable 60% of the population could access, but now the President said that those who belong to the 80% of the most vulnerable households will be able to access.
The President also recalled the changes that will come for the AFP industry, issues that had also already been announced last year when an agreement was reached with the deputies. There, for example, the creation of non-profit AFPs or organized as cooperatives stands out.
It was also introduced the possibility that the administrators can distribute profits among their affiliates and offer differentiated commissions, depending on the permanence and size of the group that joins.
Another issue that was incorporated is the requirement that administrators that have negative profitability and lower than that of a reference portfolio, return up to 20% of the commissions charged to their users.
The President also highlighted “the strengthening of the bidding mechanisms for the flows of new entrants to the pension system, to reduce the commissions charged.”
