Chile 2011

Chile’s retirement income system comprises means-tested social assistance; a mandatory privately-managed defined contribution system based on employee contributions with individual accounts managed by a small number of Administradoras de Fondos de Pensiones (AFPs); and a framework for supplementary plans sponsored by employers (the APVC schemes).

The following table shows Chile’s position when compared to the 15 other countries and some of the indicators that either scored relatively well or poorly.

The overall index value for the Chilean system could be increased by:

• raising the level of mandatory contributions to increase the net replacement
• introducing a minimum access age for the supplementary plans so that it is clear that these benefits are preserved for retirement purposes
• introducing a requirement that part of the retirement benefit must be taken as an income stream
• continuing to review the minimum pension for the poorest pensioners
• introducing arrangements to protect the interests of both parties in a divorce
• enabling individuals to retire gradually whilst receiving a part pension

The Chilean index value rose from 59.9 in 2010 to 64.9 in 2011 due primarily to a material increase in the sustainability sub-index arising from new OECD data which showed a much higher coverage than was previously used.