📋 Tender Overview
After four consecutive days of analysis, the Labor and Social Security Commission concluded the processing of the project that creates a new Mixed Pension System and a Social Security in the contributory pillar, improves the Universal Guaranteed Pension and establishes benefits and regulatory modifications.
With the voting on the indications regarding the tender of current members and those related to the Single Collection System for pension contributions; the possibility that cooperatives can form a pension administrator, contributions from independents and the investment regime, among others, the Labor and Social Security Commission concluded the processing of the pension reform at 10 p.m. on Monday, January 20.
One of the issues whose analysis lasted until late into the night was the article that establishes that the Superintendency of Pensions may carry out public tenders and that will allow the bidding of current members and introduce a greater degree of competition between administrators. According to the Executive, this stock bidding mechanism not only generates downward competitive pressure, but also "allows the entry of new players."
The members of the commission valued the formula agreed upon, which includes proposals from the so-called Marcel Commission and Bravo Commission, which carried out work on this matter years ago. The project establishes a social security system that aims to address the country's increasing longevity rates and the gap between men's and women's pensions, as well as increasing the pension contribution from 10% to 16%.
In the final stretch, the commission also supported the increase in the Universal Guaranteed Pension (PGU) by defining the sections of said increase and its methodology. It also supported the update of the concept of base pension considering the new tools created by the law. The legal text must now be analyzed by the Finance Committee , in the matters within its competence, before being submitted to the Senate for consideration.
THEY VALUE PROGRESS
Following the vote, the chairman of the Labour and Social Security Committee, Senator Juan Antonio Coloma, said that "an agreement was reached on an increase in the individual contribution of 6%. We believe that this is the most important aspect of the reform, and this means, for example, that a person who currently has a pension of 350 thousand pesos, with 10% savings, would have saved 16% of the amount and would have had 560 thousand pesos."
The senator praised the award to men and women who have contributed for many years; the decision to equalize the pension of a man and a woman at the same age and with the same savings; the improvement of competition between administrators; and the increase in the PGU, among other measures.
Senator Luciano Cruz-Coke , for his part, highlighted "the convergence of different opinions and technicians, as well as the ability to reach political agreement... the mission of the Finance Committee is to ensure that all those aspects that we work on can also be sustained in the future, so that this project has the resources and sustainability in the future to be able to improve pensions."
In turn, Senator Rodrigo Galilea pointed out that the initiative "takes on enormous challenges, challenges that have not been able to be resolved for many years. Beyond always emphasizing how important it is to save more, how important it is to improve some aspects of the PGU, improve competition and other aspects such as the pension gaps, I want to emphasize that this is a good agreement and it is also a demonstration that our country's politics is capable of generating good and sustainable public policies."
Senator Alejandra Sepúlveda was satisfied and said that “the agreement was respected, understanding that it was not what everyone wanted, we lacked many things. In addition, today we are going to have permanent conversations with political sectors close to the government in the Chamber of Deputies so that this can come to fruition….I think that Banco Estado should have entered into the pension system process, but we understand that we will look for a way out at some point.”
Meanwhile, the Minister of Labor and Social Security, Jeannette Jara , indicated that "today we have taken a significant step in this bill. Fundamental regulations have been approved, such as the creation of the employer contribution... the creation of social security that comes to provide a mixed part to our system that was based only on individual capitalization in the contributory part. The bidding of current affiliates is taking place so that in the future more contributors in Chile can access lower commissions... benefits have been approved that help reduce the inequalities of our pension system. Compensation for life expectancy between men and women and defined benefits such as compensation for years of contributions that will begin to benefit current retirees who have completed 10 years of contributions in the case of women and 20 years of contributions in the case of men."
Finally, the Minister of Finance, Mario Marcel , said that if what was approved by the commission is supported "we will have benefits for 2.8 million senior citizens through the increase in the PGU. We will have benefits for 900 thousand retired senior citizens through the guarantee of 0.1 UF per year of contributions, that is, as recognition of the savings effort. We will have compensation for the difference in life expectancy for around 900 thousand women. These are very significant figures and they have also been accompanied by important structural changes within the pension system that allow us to a large extent to comply with what was proposed of moving towards a truly mixed pension system."
