Chile Enacts Historic Pension Reform Under President Gabriel Boric
Chilean President Gabriel Boric has signed a transformative pension reform law aimed at revising a system from Pinochet’s regime. Effective in September 2025, the reform introduces a mixed contribution system increasing pensions for 2.8 million seniors by up to 35%. The law also addresses gender disparities and enhances competition among AFPs, marking a significant social security advancement in Chile’s history.
Chilean President Gabriel Boric Font has enacted a significant pension reform law aimed at overhauling a retirement system established during Augusto Pinochet Ugarte’s dictatorship. This new law, effective from September 2025 and fully implemented by 2035, introduces a mixed pension system incorporating worker and employer contributions, alongside a state-sponsored social security component, which aims to increase pensions for 2.8 million senior citizens by 14% to 35%. Currently, approximately half of the retirees receive a mere US$ 350 monthly while the minimum wage is set at US$ 500.
In a government statement, it was declared, “The Pension Reform is the most important advance in pension matters in the last decades. This initiative creates a new contributory Social Security, improves the Universal Guaranteed Pension, establishes benefits for years of contributions and compensation for women’s life expectancy.” During the law’s launch, Boric emphasized the collective achievement of the reform, noting, “It cost a lot. For 10 years different governments were processing different projects to try to increase pensions, but there was no agreement.”
The legislation also addresses gender inequalities, acknowledges both paid and unpaid labor, and enhances competition among Pension Fund Administrators (AFPs) by facilitating public bids and allowing new entrants. This reform, heralded as a significant improvement in pensions, transitions from a system reliant solely on worker contributions to a more inclusive approach. Boric remarked, “This will allow the biggest increase in pensions in the last decades.”
Passed on January 30 after over a decade of obstacles, the reform’s success stemmed from a rare collaboration with parts of the opposition, including the center-right coalition Chile Vamos. Finance Minister Mario Marcel expressed gratitude to Chile Vamos lawmakers for their bipartisan effort, stating, “It is important to recognize those who were willing to listen.” He acknowledged the political hurdles faced by legislators in pursuit of this progressive reform.
The AFP system, established in 1981, has faced criticism for benefiting administrators while providing inadequate pension payouts, leading to public unrest and demands for change. The new reform represents a substantial victory for President Boric’s leftist administration, fulfilling a long-held aspiration for a more equitable pension framework.
In conclusion, the pension reform signed by President Gabriel Boric represents a transformative shift in Chile’s retirement system, incorporating contributions from workers, employers, and the state to address longstanding inequities. This initiative not only seeks to enhance pensions for millions of seniors but also reflects a collective political effort to transcend previous divisions. The reform is positioned as a crucial advancement in social security, promising substantial benefits while correcting gender disparities and recognizing diverse forms of work.
Original Source: en.mercopress.com
