“The AFPs, in this reform, are over,” Boric said.
The president said that the reform is based on social security principles with contributions from the State, employers and workers and contemplates the creation of a public administrator of funds, to put an end to the exclusive management of the criticized Pension Fund Administrators (AFP) .
“There will be new private investment managers with the exclusive purpose of investing pension funds and, in addition, there will be a public alternative, which will promote competition with the entry of new actors,” said Boric.
“We want to leave behind, in this way, an extreme system that has not been able to meet the expectations that were placed on it and that has recognized deficiencies,” he added.
What will the mixed pension system consist of?
The AFPs will be replaced by a Mixed Pension System, with a public investment manager and private actors.
“The current pension system is in crisis, and nobody doubts that. Today’s pensions are not enough for our fathers, mothers, grandfathers, grandmothers to sustain a decent life in their old age, no matter how hard they worked during their lives. Borik said.
Chile rejects draft new Constitution
The Boric government’s proposal, which would enter Congress next week – where it does not have a majority – will maintain the individual savings pillar, which currently averages 10.5% of salary, and adds 6% by the employer, which until now has not had no involvement.