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Pension Reform Bill Changes

CHILE

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.

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