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  HOME | Chile

Chile’s Piñera Apologizes, Announces Reforms in Pensions, Healthcare, Wages, Prices

SANTIAGO – Chile’s President Sebastian Piñera announced on Tuesday a social agenda to reform the pension, healthcare and pharmaceutical systems, as well as minimum wages and the cost of electricity, among other measures, after apologizing to the citizens for not seeing their needs.

Piñera’s social agenda also included higher taxes on the wealthiest citizens, the creation of a victims’ ombudsman, a reduction in the allowances of parliamentarians and salaries of the public servants.

Piñera presented these measures on national television towards the end of the fifth day of massive protests by people demanding a more equitable country.

Much of the country has been in a state of emergency and under curfew with the army in charge of security, following unrest and vandalism that have accompanied the protests. The ensuing violence has left a death toll of at least 15 killed during the unrest.

The major announcements by Piñera are as follows:

PENSIONS

Pension reform envisages increasing in the so-called Solidarity Pillar – the pension system in which the state participates – with a 20-percent hike in the Basic Solidarity Pension and another 20 percent in the Planned Solidarity Contribution, which, he claimed, would benefit 590,000 and 945,000 pensioners, respectively.

He also announced an additional increase in basic pensions and solidarity contributions for 2021-22 for retirees over the age of 75, tax resources to supplement the planned savings of the middle class and working women, and tax resource contributions to improve pensions for non-contributing older adults.

The pension system has been one of the main issues that have stirred up Chilean society. It forces workers to deposit about 12 percent of their salary each month in individual accounts held by private entities that give an average pension of about $220, just over half the minimum wage, which currently stands at $422 per month.

HEALTH AND MEDICINE

He announced an urgent legislative action on a bill he had already sent to Congress to create a so-called Catastrophic Disease Insurance “in order to lay down a ceiling on family health spending.”

He also said he would provide insurance covering some of the expenses incurred by medicine-dependent Chilean families and an extension of the National Health Fund (Fonasa) agreement to pharmacies to reduce the price of medicines.

GUARANTEED MINIMUM WAGES

The president announced the creation of a guaranteed minimum income of 350,000 pesos (about $482) supplementing the salary of full-time workers when it is less than that amount, a benefit that will be applied proportionately to those under the age of 15 and those older than 65.

TAXES ON THE RICH

Those with a monthly income of over eight million pesos (about $11,000) will pay a 40-percent tax, which is expected to contribute $160 billion to the public coffers, and would help fund these new measures, Piñera said.

REDUCTION IN ALLOWANCES AND SALARIES OF LAWMAKERS AND PUBLIC SERVANTS

Piñera announced a reduction in the allowances of parliamentarians and salaries of civil servants, as well as a reduction in the number of MPs and a limitation on the number of terms they may serve.

ELECTRICITY COST

He promised to create a mechanism to stabilize electricity prices, which would provide for a rollback of the recent 9.2 percent increase in prices in the sector.

Moreover, he urged the National Congress to expedite some bills sent by the government regarding the protection of children and adolescents and the elderly who cannot fend for themselves.

Finally, Piñera announced a $350-million reconstruction plan following the damage and destruction to public and private property as a result of the violence that has engulfed the country in recent days.

 

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