To Improve Pensions, We Need to Reactivate the Economy

Abstract

The current pension system has left a large share of the population discontented. Such is the degree of displeasure that close to one million people have already taken part in two marches organized to protest against it. Although the trigger for these demonstrations was linked to scandals involving ethically compromised situations, the underlying reason for public discontent is low pensions. Indeed, according to the Superintendency of Pensions, the average pension of retirees as of July 2016 was Ch$191,000, a figure 26% below the current minimum wage. In response to the massive expression of discontent, President Bachelet announced a series of measures aimed at improving pensions. Among the most significant is the proposal to raise pension contribution rates by 5%. Continue reading...