Thousands Protest Chile's Pinochet-Era Private Pension System

[Judi Lynn]

Thousands Protest Chile's Pinochet-Era Private Pension System
Published 26 March 2017

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The march, organized by workers' organizations and trade unions, kicked off at 11:00 a.m. local time in the capital city Santiago's in Plaza de las Armas, as well as several other cities including.

"We hope today we will have a lot of people and show that the social movements are saying, 'We don't want anymore AFP,'" a protester with the Cabreados Movement told Chile's Bio Bio TV at the demonstration in Santiago. &quot AFP) is already a failure, and our political actors need to know that the social movements won't stop."

Luis Messina, spokesperson for the CNT labor union, predicted that Sunday's demonstration would be a "historic" march. "Perhaps the largest in history," he said.The protest comes after several marches in the country to demand President Michelle Bachelet end the AFP private pension system which puts the average retirement pension below the minimum wage. The contested system also forces workers to deposit a portion of their wages and an administrative fee into accounts managed by private hands.

Last year, the pension fund was modified to reflect changes in the country's mortality rates starting mid-2016. Workers who retire will now receive close to 2.1 percent less money for their retirement.

More:
http://www.telesurtv.net/english/news/Thousands-Protest-Chiles-Pinochet-Era-Private-Pension-System-20170326-0009.html

[tenorly]

1. It's an Amway-style pyramid scheme that the Chilean state spends 6% of GDP to keep afloat.

Chile's private pension system is often cited as the best thing since sliced bread (especially by Pinochet apologists), and as a model for the region and the U.S. by the likes of Narco Rubio and the Kochs.

What many do not know is that each account pays 30% commissions off the top. Consequently 80% of Chilean retirees end up with nothing or close to it in their pension accounts. They thus depend on a state subsidy to cover the minimum $200 pension Chilean law guarantees - and Chile's expensive.

Pinochet, it should be noted, left out the police and military from the scheme (they collect state-run, $1,500 pensions).

So that's a "private" pension system for you: the profits are private - but the costs are largely public. In Chile's case 6% of GDP has to be set aside - one third of its federal budget - on bailing out retirees with hollowed-out private pensions.

Chile can afford to do this thanks to its copper - which nets it $40 billion in exports and mostly remains state-owned. Nevertheless, calls for a switch to a national social security system, or least a choice between the two, have been growing.

Argentina had a similar experience with its private pension funds between 1994 and 2008 - when they were nationalized by the much-demonized Cristina Kirchner administration. Argentina did keep the private option - but almost nobody takes it.

Minimum pensions in Argentina meanwhile rose from $50 a month to $450 by the time she left office in late 2015, with 70% of prescriptions issued free of charge and many other benefits besides.

Suffice it to say that if Argentina were still doling out $3 billion a year to bail out private pension funds, none of this could have been possible.