Chile pension reforms unveiled amidst discontent

Chile's President Michelle Bachelet appeared on national television Tuesday to propose a hike to contributions employers make to pensions and eventually make contributions from self-employed workers mandatory.

"This increase in contributions will allow us to build the foundation for collective savings with solidarity. Part of it will enable raising current pensions and the other part will be used to ensure more equity in future pensions," she said.

Bachelet also proposed eliminating unpopular fees charged by the funds, using a single mortality table for both men and women and strengthening a program that provides a minimum pension for Chileans who have not contributed to a pension fund.

But critics of the plan have vowed to hold demonstrations on Wednesday. Chile's six private pension funds, which collectively manage $160 billion (143.5 billion euros) in assets, have come under fire from protesters who say they do not guarantee a dignified old age and only perpetuate rising inequality.

"Prepare your pot, ready your ladle at 10 a.m. Wednesday, August 21 (against private pensions, bang on pots and pans!)," organizers tweeted.

Chile's system of private pensions has roots in the dictatorship of Augusto Pinochet. In 1981 the military ruler imposed the private system for most workers though he excluded the armed forces, police and other state security agencies, which to this day enjoy a more generous system.

That has caused outrage among many Chilean workers, who regularly agitate for a more equitable system. As recently as July 24, hundreds of thousands of people poured into the streets to demand an end to the Pinochet-era pension system.

Under the current system, thousands of Chileans are expected to survive on around 165 euros a month. The pension system is a major issue in Chile and Bachelet's initiative comes as opinion polls rated her approval at historic lows earlier this year.

jar/kl (Reuters, EFE)