Pension Reform Bill Changes

Amid the announcement of the impending closure of Felices y Forrados, President Piñera has announced further changes to a pension reform bill that he has described as "urgent and necessary".

In a televised speech, Piñera said the bill will expand solidarity pillar coverage from 60% to 80% of the country's population.

• No retiree should receive a pension below the poverty line
• Includes a contribution from employers of 6% of each worker's gross salary
  • 3% will go to an individual account managed by a state-owned entity
  • 3% to solidarity program
• Guarantees a minimum pension to new pensioners of approx. 325,000 pesos (~$450)

Separately, the bill increases competition between private pension managers, known as AFPs

• Allows creation of not-for-profit AFPs
• Allows AFPs to distribute profits among contributors
• AFPs with negative profitability or below a benchmark portfolio will have to return as much as 20% of commissions charged.