Fynsa
The opinion of academics, technicians and politicians has shown the conviction that it is necessary to reform the pension system in Chile. the pension system in Chile needs to be reformed. There is now a broad technical consensus on the structural problems affecting the Chilean system, which has been studied in depth for more than 15 years by various commissions and experts of different political tendencies.
Although there is agreement on the technical concepts, the political world has not managed to incorporate this level of consensus in its own discussions and decisions, the political world has not been able to incorporate this level of consensus in its own discussions and decisions. At CFA Society Chile we believe that it is the lack of political will that has prevented us from reaching an agreement that would allow us to advance in a structural and long-term reform that responds to the demands and expectations of the citizens.
The last three governments have presented reform projects that, in general terms, are in line with what is observed in most OECD countries. These proposals coincide in: increasing the contribution rate by 5 to 6 points, The distribution of which goes to individual accounts, collective savings and solidarity; moving towards a mixed pension system, tripartite financing by the worker, the employer and the State, incorporating intergenerational and gender solidarity components; and seek to introduce greater competition to the industry in different dimensions.
For CFA Society Chile, a good reform should incorporate gradual increases in the retirement of all workers, promote the institutionalization and sustainability of the system, and tend towards a technical and professional administration of the resources, encouraging participation and competition among the best investment managers in Chile and the world.
In addition, the governance of a good system has to consider the best professionalism and ethical conduct, both in the operation of the private participants and in the participation of the State, to ensure the best professionalism and ethical conduct, both in the operation of the private participants and in the participation of the State, to ensure the safeguarding and growth of pensions. It is also critical that each new benefit provided by the State be fully funded, either through increased structural tax revenues and/or through new contributions that are contemplated in the reform.
Finally, the system must take into account the potential disincentives generated by guaranteed pensions, and generate tools to help minimize this risk, in addition to incorporating incentives for contributions and labor formality. generate tools that contribute to minimizing this risk, in addition to incorporating incentives for contribution and labor formality, as well as any other incentive that promotes voluntary savings. In addition, measures that promote the withdrawal of retirement savings to be used for current consumption, such as self-loans, are ideas that point in the opposite direction of the final objective of any pension system, which is the maximum possible accumulation of resources for old age, and should therefore be avoided.
In this line, we are convinced that today is the time to reach a great political agreement that will enable a reform focused on improving the present and future pensions of Chileans, that encourages savings and investment, and thus promotes the growth and development of the country. We cannot miss a new opportunity and continue postponing a key need of the population. It is time to implement a good pension reform.
By Hugo Aravena, CFA, Pamela Auszenker, CFA and Javier García, CFA.
