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  HOME | Chile

Chile Approves Lower-Range Pension Hike by Up to 50% amid Protests

SANTIAGO – The Chilean Senate unanimously passed a bill on Wednesday to gradually increase the lowest pensions in the country by up to 50 percent.

The bill had earlier been passed in the Chamber of Deputies on Tuesday and was ready to be enacted as a law.

The initiative was a part of the social agenda of the government led by President Sebastian Piñera, in the wake of massive citizens’ protests that have been going on in the country for almost seven weeks. One of the major complaints of the protesters targeted the privatized model of the Chilean pension system.

The agreement was the result of an understanding reached in the framework of budget discussions between government and opposition legislators.

The increase in pensions for the most vulnerable sections will begin to be gradually implemented from December this year and nearly 1.6 million people will benefit from it.

The pension bill sought to increase the amount under the Basic Solidarity Pension (PBS), which is granted to people who have not been able to access a pension; and increase the Maximum Pension with Solidarity Contribution (PMAS), for which the state is not required to make an extra contribution.

The Solidarity Social Security Contribution (APS), which complements the income of retired people that are a part of the privatized pension system but receive very low amounts, will also rise as a result of the increase in PBS and PMAS.

Therefore, in December this year, the PBS will rise by 50 percent for pensioners aged 80 and above, from 110,201 pesos ($140) to 165,302 pesos (about $210).

In the case of PMAS, from December there will be a 50-percent increase for pensioners aged 80 and over, and will reach 488,000 pesos.

Both the PBS and PMAS will increase 30 percent for pensioners aged 75 to 79 and 25 percent for pensioners under 75. Moreover, they will increase progressively in 2021 and 2022 up to 50 percent.

The bill also allows those who receive disability or solidarity pensions not to lose that benefit if they also receive working income.

Work Minister tweeted that the increase in pensions was going to be a reality, and that from December more than one and a half-million Chileans would benefit from this initiative.

The pension system – managed by the pension administration agency, or AFP – has been one of the main issues that have stirred up Chilean society.

It forces workers to deposit about 10 percent of their salary each month in individual accounts held by private entities, who make million-dollar profits from investing the workers’ contributions.

However, they give an average pension of only about $220, just over half the minimum wage, which currently stands at $422 per month.

 

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