It is considered to be the most important social change introduced by the Government of President Michelle Bachelet and has three main aspects:

1. creation of a new Solidarity Pensions System (SPS), enabling the State to play its part in providing guaranteed social security for the poorest 60 per cent of the population;
2. increase in pension coverage for vulnerable groups: young people, women and selfemployed workers; and
3. improvements in the funded individual account system (increased competition, reduction of costs, incentives for Voluntary Pension Saving (Ahorro Previsional Voluntario (APV)).

The Pension Reform includes a wide range of measures that combined constitute a new global pension system rather than a collection of partial measures. This change allowed the transfer from a funded individual account system to one which includes a funded individual account within a social protection system based on solidarity financed through taxation and with an important element of voluntary pension savings. In this way, the combination of contributory financed and non-contributory financed pensions ensures that the incentive value of individual contributions is maintained while at the same time the risks of poverty in old-age and disability are minimized.