María José Zaldívar and pension reform: “There must be recognition of the worker’s effort”

The Minister of Labor, María José Zaldívar, hopes that the process in the Chamber of Deputies will be as agile as in the Senate, because “people need the resources.” In that sense, it defends that the retirement is with taxes, since it affects the sectors of greater income.

Regarding the pension reform, he maintains that the talks are still in search of an agreement, but there are no deadlines yet for a possible delivery of the project. He rules out that there was any negotiation for the opposition to support the project to withdraw funds from the government in exchange for delivering the 6 extra contribution points to a solidarity fund.

Of all the restrictions that the government project had, it advanced only with the application of the income tax, is that the unreachable?

-The constitutional reform project allows retirement without taxes to high-income people and that is absolutely breaking what corresponds. People with the highest income must contribute their taxes to finance the country’s public policies. In this matter, it is essential that a balance be restored, which is very healthy. And at this point there has been unfortunately bad faith by misrepresenting and claiming that these resources had already paid taxes. Also, only high-income people pay taxes and the tax is proportional to that person’s income.

Opposition senators asked that low income brackets be exempted from paying taxes. Can this point be negotiated in the Chamber?

-Low income brackets are exempt from payment. All the people who have incomes below $ 700 thousand are not taxed. In addition, the application of this tax is progressive, that is, people who have incomes between $ 700 and $ 1.5 million have a rate of only 2.2%.

With the presentation to the Constitutional Court and with this project, do you expect the door to be closed to a third or fourth withdrawal?

– What we want is that the institutional framework that is in force today be respected, that the modifications that are made are respecting the rules that regulate it. We are concerned about the system and the institutionality as a whole and not just about an eventual third or fourth withdrawal.

What are the times that are handled? Is it enough to pay before Christmas?

-That will depend on the legislative process. We hope that the discussion in the House will be as quick and agile as it was in the Senate, because people need the resources to arrive as soon as possible.

Can the effect of these two withdrawals on pensions be quantified? How much lower will they be?

– Pensions will be considerably lower. The first withdrawal meant 2 contribution points, and the second withdrawal will mean 1.8 points less. The impact on pensions will depend a lot on how old you are and how long you need to retire. The effects are different. In young people it is brutal, since in the first years they generate more profitability, and that will be lost. A person who is closer to retirement has no chance of recovery. 60% of the pensioners who made the first withdrawal, were left without funds and there the effect is 100%.

And in that sense, will the Treasury be able to guarantee basic pensions like the current ones or better ones, and how many extra resources will that mean?

-It is a complex issue and that is why it is an exclusive initiative of the President of the Republic. This project involves spending and although some parliamentarians have told us that it will be an expense in the future, the truth is that it is immediate, because there are pensioners who are left without funds or with very little. But, in addition, we will have a very complex problem, because for some people who, having withdrawn all the funds, are not within the 60% most vulnerable and will be left without a pension. In sum, there will be about 4 million people who would be left with nothing in their pension funds.

In that sense, it was said that there were negotiations with the opposition to support their retirement project in exchange for advancing with the pension reform by granting the extra 6% of contributions to a solidarity fund.

– It is not like that, they are subjects that go by separate strings. Obviously, one affects the other. As stated, the first withdrawal is equivalent to 2% of contributions and this second practically another 2%, and our reform increased by 6 points. We are absolutely clear that we need a collective solidarity component, since individual savings have not been enough to finance pensions, but we are also clear about the incentive that the worker must have to contribute. This is a quote that is paid by the employer and we need the worker to see reflected the effort of years of formal work.

Do you mean that the reform will consider an individual component?

-There must be a recognition of the effort of the worker in the final result that I obtain in my pension.

Will you advance yes or yes in a pension reform?

-It is important to reach a good agreement, but it is impossible to build a better system if it is not based on an agreement between the parties, we need to give it legitimacy. This agreement has to be the result of the different visions that exist.

Do you have a deadline to reach the agreement and enter the project? End of the year or early next year?

– I cannot give that type of certainties, but the conversations have been maintained.