Pensions

Discontent, Aspirations, and Realities

Abstract

The controversy over the high retirement pensions of some officials of Gendarmería (Chile's prison service) has intensified criticism of and social discontent with our pension system. Added to this scandal are disappointment over low pensions, the excessive profits of the AFPs (pension fund administrators), and the attempts by some of them to reduce their tax burden. In the wake of these events, a series of opinions has emerged, such as the idea of returning to a pay-as-you-go system, which has caused disorientation in public opinion and fuels unrealistic aspirations. This article has a pedagogical aim and is something of a payback for the many times I have (unsuccessfully) tried to explain this phenomenon to the discontented. Anecdotally, part of this failure is due to the fact that, shortly into the conversation, annoyance with the AFPs becomes combined with the expression of other grievances, whereby the initial focus is lost. Continue reading...