The Pension Reform in Chile
The pension reform addresses various aspects of the functioning and organization of the Chilean pension system in a global manner, thus creating a modern and efficient social protection system which provides appropriate guarantees for the population.
It is considered to be the most important social change introduced by the Government of President Michelle Bachelet and has three main aspects:
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.
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