The President of the Republic has practiced the freedom to choose throughout his life. However, in the First Representative function you have the limit of not being able to do what you want and the obligation to «do what you have to do». At the crossroads of the Government, it has in its hands to release some social tension, giving a transcendent turn to the pension project that is being processed in Congress. It is sufficient to allocate a substantial percentage of the employer’s contribution of 4% or more – as fixed – to inter- and intra-generational solidarity transfers that make it possible, in the first stage, to increase pensions from the AFP system. This may mean – without joining the tax box – a significant increase in current and future contribution pensions. Likewise, the creation of a public body – let us call it the «Solidarity Pension Corporation» – responsible for administering the employer’s compulsory contribution would be an unequivocal message of the political will for change and a spirit to restore the trust that citizens lost in the entire political class.
A decision such as this opens the door to a mixed pension system which, within a reasonable time, would allow individuals the right to choose between staying in the individual capitalization system administered by the AFPs, or joining a solidarity pension system administered by the AFP Corporation. Chileans and Chileans would finally have! the freedom to choose between one system and the other.
There is nothing more specific to democracy than the freedom to choose, Mr. President!
Building a public and solidarity pension system, alternative to the private system of individual capitalization, requires response on the following premises:
Create the Solidarity Pension Corporation (CSP) . A public institution, autonomous, with its own assets and not for profit, responsible for administering a solidarity system of pensions with inter- and intra-generational transfers that will be financed with compulsory contributions, thus fulfilling the action that the Constitution entrusts to the State. You can also manage the various forms of voluntary planned savings.
Those who will be listed in the Corporation (CSP). In a first instance, all employers in favour of their dependents who are required to make planned contributions in the current AFP system. Also self-employed.
Option to quote only in the Corporation (CSP). From the date indicated by the law created by the Corporation, workers who start their working life may do so. And, within the timeframe you set, all those who choose to change from the AFP in which they are listed may do so. In both situations the Corporation (CPS) will collect the worker’s compulsory contribution (10%) and the employer to be fixed (4% or more).
How the option will be exercised. By a simple application signed by the worker stating his willingness to do so.
Clarity regarding the essentially supportive nature of the Corporation. The contributions administered by the Corporation are intended to pay pensions, essentially through mechanisms of intergenerational and intragenerational solidarity. That is, from younger generations to older generations of retirement age and among the same generation, in order to avoid situations of discrimination such as gender.
The option to be quoted in the Corporation does not allow you to return to the AFP system. Since the forms of administration and calculation of pensions in the individual capitalization system (annuity or scheduled retirement) are different from those offered by the Corporation, whose bases are based on solidarity systems, it would not be possible to change or return to the AFP System.
In any event, the pension solidarity calculation system(s) shall consider the amounts and years quoted by each worker and the worker as the cause of their employer’s contribution. Also, other factors that influence how to determine the rate of replacement; the age at which the right to pension is exercised, after the age of 60 or 65; compensation for women with «working day» at home and in childcare; life expectancy that can be supplemented by longevity insurance, without prejudice to what is expressed in the following numeral.
Life expectancy in the calculation of pensions in one or the other system. In this regard, Senator Provoste’s approach and Senators Huenchumilla and Pizarro should be consolidated to the Comptroller General of the Republic, as follows:
Pensions from the individual capitalization system of AFPs. The calculation – or recalculation – of the pensions of those who quote – or have quoted – in an AFP should be determined on the basis of the «individual» life expectancy of each person who retires – or has retired – simply because their capitalization accounts are – or were – also «individual». This should be recorded – and consigned – by the bodies responsible for setting life expectancies (the Super Pensions and the Financial Market Commission). There is no justification – neither legal nor constitutional – that those who opt for – or have – an annuity or scheduled retirement pension will be subject – or have been applied to – the mortality and life expectancy tables that are «solidarity» or «collective», when their system is or has been individually capitalized. And it is not ballad, because the poorest tend to live less time than the richest, as do those who work in mining activities and others with «heavy work». In both situations life expectancy is lower and therefore some would be subsidizing the richest and the others working in lighter activities. Moreover, in such cases, various constitutional guarantees would be affected, including the right to social security, equality before the law and the right to property, guarantees referred to in Article 19 No. 18, No. 2 and No. 24 of the Constitution, respectively. (See HERE)
Pensions that come from a solidarity or collective system. The calculation of pensions for those who opt for such systems as the one proposed with the creation of the «Pension Solidarity Corporation» should obviously be carried out with mortality and life expectancy tables that are «collective» or solidarity, only that it would be necessary to adjust them to more real factors such as those used by the INE in its elaboration.
Mr. President! In his hands is the creation of a solidarity system of pensions, alternative to AFPs, and that allows to exercise the most precious right of democracy: the freedom to choose. In this case, between a private system of individual capitalization and a public and solidarity system. It is also, Mr President, on your feet, to take the step that history has set as an option for you.
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