Bachelet Announces Pension Reform

[Judi Lynn]

Bachelet Announces Pension Reform
May 02 12:28 2014

President Michelle Bachelet announced that specialists will be reviewing the pensioning system in Chile in order to make possible changes.

SANTIAGO — At a conference on Tuesday, 29th of May, Michelle Bachelet announced changes in the system of pensioning in Chile.

“It is no secret that pensions are not up to what workers would expect, there are those who have contributed all their lives and still get an inadequate pension”, explained Bachelet. The current pension system in effect since the late 80s of the last century is another of the legacies of the civil-military dictatorship led by Augusto Pinochet (1973-1990), that successive civilian governments did not intend to reverse.

By signing a decree, the Head of State, accompanied by the Minister of Finance, Alberto Arenas and the Minister of Labor, Javiera Blanco, created a Presidential Advisory Committee, with the commissioning of a study on the pension system and the aim to propose solutions in the field.

~snip~

“We are initiating a fundamental process of reflection and discussion for Chileans to have a pension system of dignified and appropriate benefit to their needs. A process that we want to be highly participatory, but also on a very high technical level, to allow us to take care of the clear inadequacies of our social security system”, stated Bachelet at the conference.

More:
http://www.ilovechile.cl/2014/05/02/bachelet-announces-pension-reform/109285

[Demeter]

1. Good luck with that

Whenever I hear the word "review" or "reform" in this country, I grab hold of my purse, my nearest and dearest, and lock the doors.

"Review" in America just another word for "rewrite the law to favor the favored".

"Reform" is the code phrase for "confiscate and disenfranchise".

And until we can throw the 1% out of the corridors of power, it will remain ever so.

[Louisiana1976]

2. Well said.

I wonder if it's the same in Chile as it is in America.

[Demeter]

3. If it isn't, maybe I'll emigrate

[Judi Lynn]

4. Bachelet is doing her best to reform a Pinochet-era privatized Milton Friedman-inspired system!

From Wikipedia:

Pension reform of 1980/81[edit]

Pinochet in 1982.

On November 4, 1980, under the leadership of José Piñera, Secretary of Labor and Pensions under Augusto Pinochet with the collaboration of his team of Chicago Boys, the PAYGO pension system was changed to a capital funded system run by investment funds.[2] José Piñera had the idea of privatizing the pension system for the first time when reading the book Capitalism and Freedom from Milton Friedman[3] There have been implemented several (private) pension funds the so-called Administradoras de Fondos de Pensiones (AFPs). For all citizens who are legally defined as workers, employers must pay a proportion of the earnings to a pension fund. Workers who had already paid in the old system, got an option to continue to pay into the old system. But the statutory minimum contribution to the new private pension funds was set 11% lower than the contributions to the old pension system, therefore most workers changed to the new pension system.[4]

Chilean military that implemented the new AFP system excluded themselves from it keeping obtaining their pensions from the Caja de Previsión de la Defensa Nacional.[5] The pensions of the military are substantially higher than those of the rest of Chileans, being most often similar to the income they have during active service.[5]

More:
http://en.wikipedia.org/wiki/Pensions_in_Chile

[Peace Patriot]

5. I don't think that's the case with Batchelet in Chile--

that "reform" is a code word for theft against the poor (as it is here, I agree)--but we'll see. Batchelet was elected under great pressure from the true left--genuine and massive protests by students and the poor--and has been very responsive to them, but, again, we'll see.

The pension system issue is different from ours. We already HAVE a good pension system--public-run, self-funding, efficient. You pay into it all your life and promptly and efficiently get a portion of the total for your old age, without chunks of it being stolen to pay CEOs multi-million dollar salaries and to pad the pockets of uber-rich Wall Street investors.* Our corpo-fascists want to savage--loot, "privatize"--this highly efficient, self-funding system.

In Chile, however--as Judi Lynn points out, below--the pension system has already been savaged ("privatized&quot , by the U.S.-supported Pinochet murderers and torturers. The issue is UN-"privatizing" it--returning it to the public venue, where your lifelong contributions to your own pension cannot be easily stolen from you. I'm a little worried by Batchelet's language about a "highly technical" review--to me, here, "highly technical" can also be code for theft--but she also says "highly participatory." So, again, we shall see. She does seem far more responsive to the disregarded, impoverished, robbed majority than anybody in high office here, and, as I said, is under intense pressure from the Left. And she is very, very popular (80% approval rating), which also gives her power to get the job done right.

-----------------

*(Social Security payments should better reflect cost of living, but the system is sound--all criticism of it, in the corpo-fascist press, to the contrary notwithstanding. I've heard that the government has borrowed against the fund, and maybe they will collapse it and "privatize" it that way--a stealth transfer of the money to military contractors and other blood-sucking 1%-ers. But, for now, it's working fine, and has always worked fine because it is a part of "the Commons" (unlootable, except by stealth)).

[Paolo123]

6. Social Security

"I've heard that the government has borrowed against the fund,"

The problem Peace Patriot is that in order to get public support for Social Security it was created to be an investment scheme. You pay money in, the government invests it, and when you retire the government pays you a pension (this is of course a simplification).

Social Security only invests in US treasuries. So, SS collects money - SS gives it to the federal government and in return gets a piece of paper from the federal government promising to pay interest over X years and principal paid back.

Here's the problem: The federal government spends way too much money (mostly on invading and killing people, and bailing out/subsidizing corporations) so when it comes time to pay back social security some people fear that the money won't be there.

This is sort of like lending money to your crack-head brother in law. You can get all the IOU's you want from him but they are meaningless if he will never be able to pay. Now of course that comparison that I just made is an exaggeration but the underlying point holds.

So the corporations propose that this money needs to be invested in, surprise surprise, their companies. If one trusted the bastards at all their might be a small amount of reason to this, but the fact is that the long history now of 401K ownership shows that individuals don't know what they are doing and most of the long-term return gets captured by wall street advisors and traders. The numbers are something like as follows: Over a few decades the stock market will return on average 8% (inflation adjusted) per year whereas individuals are actually receiving 4% a year for various reasons. That other 4% is being captured by wall street.

So, where am I going with this? Somehow progressives need to get over pitching Social Security as an investment and in essence fold the social security argument into the guaranteed minimum income argument.

Your average free-market leaning economist and or businessman is not in favor of government spending of course, but they do in fact support the notion that instead of a hodge podge of various state and federal programs that it would be a hell of a lot easier and less costly to just do away with all the various programs and just institute a guaranteed minimum income.

I think social security ought to be a part of this argument. So, social security has problems? fine, let's set up a guaranteed minimum income.

This thought just came to me on my morning walk today so maybe I haven't thought everything through.