Today’s Good News: Poor and Self-Employed In Chile Get Pensions
The AP reports that Chilean president Michelle Bachelet signed a new law on Tuesday, which authorizes $2 billion in spending for pensions. The program covers groups left out by the country’s private pension plans: the poor and self-employed, housewives, street vendors, and farmers. It will cover about 25% of the workforce.
Monthly pensions will start at about $125 and will rise next year to $158. Doesn’t sound like much, but it will boost pensioners above the urban poverty level of $95. The late unlamented dictator, Augusto Pinochet, established Chile’s private pension scheme in 1981 as part of a push to privatize the economy. The system required salaried workers to deposit at least 10 percent of their wages into personal accounts managed by private pension funds.
That created a huge pool of capital that spurred investment and helped produce Chile’s economic “miracle.”Many countries have since introduced similar systems. But the private system left out about a third of Chile’s work force, including most of the 1.2 million people who work in its informal economy.
Leave a Comment