Growing Calls for Reforms of El Salvador’s Privatised Pension System
Growing Calls for Reforms of El Salvador’s Privatised Pension System
By Edgardo Ayala
SAN SALVADOR, Aug 29 2014 (IPS) - Two of the promises made 16 years ago when El Salvador’s pension system was privatised have failed to materialise: There was no expansion of social security coverage and no improvement in pensions. Now pressure is growing for a reform of the system.
Although 20-year-old Kevin Alexis Cuéllar is one of the 2.7 million people enrolled in the private Pensions Savings System (SAP), he has no coverage. Cuéllar, who is self-employed and does not have steady work, told IPS that he does not pay into the private account which will supposedly provide his pension when he retires. Men in El Salvador retire at the age of 60 and women at 55.
The system established in 1998 has run up against the reality of employment conditions in this Central American nation of 6.2 million people. A 2013 report by the International Labour Organisation (ILO) and the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) found that 65.7 percent of the economically active population works in the informal economy. Based on statistics from 2011, that is equivalent to 1,269,000 people.
Cuéllar operates a sound system at business events promoting brand awareness. Forced to drop out of school to work before finishing the eight years of basic education, it will not be easy for him to find formal employment in this country, which has no specific plans to reduce the size of the informal sector. The situation worries him. “The time will come when I won’t be able to work, because of old age or sickness, and we’ll be left without a pension,” he told IPS.
That fear is shared by the tens of thousands of families who have no social security coverage.
More:
http://www.ipsnews.net/2014/08/growing-calls-for-reforms-of-el-salvadors-privatised-pension-system/
