It should be no secret that the Republican Party has long favored privatizing Social Security entirely or at least partially and Republicans have used Chile as an example of a country that can flourish if Social Security is privatized. I don’t think you will be hearing too many Republicans talking favorably about Chile’s Social Security system after what has been going on recently in the country.
In an enlightening article by Michael Hiltzik in the Los Angeles Times, the author points out that wealthy employers have always thought the Chilean system was great, but when it comes to Chilean workers and retirees, not so much. That is probably why estimated crowds of 100,000 to 200,000 marched in the streets of Santiago to demand reform. Chile’s Social Security program was put into place in 1981 by a dictator, Augusto Pinochet. When it was established the government promised that the privatized system would provide pensions that equaled 70 percent of a worker’s salary, but the real figure is just 38 percent, quite a bit lower than what Social Security covers or most other developed countries.
Don’t expect employers to be quick to endorse changes to the system because currently employers do not contribute to employee privatized plans, but Chilean President Michelle Bachelet said it is now time for employers to contribute to the nation’s retirement program, which would no longer make it a private program.
“We need to build a solidarity that doesn’t leave all responsibilities to the individual that abandons them when they’re left behind,” Bachelet said.
Since it’s implementation 35 years ago the Chilean retirement program has gone through changes, mainly dealing with percentages of contributions mandated from workers and changes dealing with financial institutions, but things are only getting worse. The funny thing is that the architect of the Chilean system Jose Pinera claimed that Social Security would be bust by 2010, but it looks like the Chilean system is in far worse straits and Social Security is more than double the age of the Chilean system.
