SANTIAGO (Reuters) – Conservative Chilean President-Elect Sebastian Pinera will present a proposal to reform the country’s pension system to Congress in the first half of 2018, one of his future ministers said in an interview published on Saturday.
Nicolás Monckeberg, who will assume the role of Labor and Social Security minister when Pinera and his cabinet take office on March 11, told newspaper La Tercera that low pension payments and an aging population meant the private system, which has served as a model for many countries, requires urgent changes.
“It is an obligation and a moral duty to present a pension reform,” Monckeberg said. “We expect to do it in the first half of this year.”
During last year’s campaign, Pinera – a billionaire who served as president from 2010-2014 – promised to strengthen the system through a $700 million boost to the state’s annual contributions, along with increases in employer contributions and incentives for workers to delay retirement.
Monckeberg said the proposal would incorporate some elements of a reform plan presented by outgoing socialist President Michelle Bachelet, including measures to increase competition between private pension fund administrators, known as AFPs.
The pension system of individual contributions through AFPs was launched during the dictatorship of Augusto Pinochet in the 1980s, and many retirees complain that payments are too small.
Chileans took to the streets on numerous occasions during Bachelet’s administration to demand improvements, and some advocated for the elimination of the private system through the “No More AFP” movement.
“The era of the ‘No More’ has passed and we should move on to the stage of ‘Yes More’ with positive proposals to increase pensions,” said Monckeberg, who said he was open to creating a state-run AFP to help boost competition.
(Reporting by Felipe Iturrieta; Writing by Luc Cohen; Editing by Bill Trott)