The hidden history of the Chilean pension system.
The privatization of the pension system in Chile, which today even results in suicides among the elderly due to the desperation of lack of resources, occurred during the dictatorship of Augusto Pinochet; “There was no democratic debate. This was decided between four generals of the Armed Forces and the advisory board of a group of neoliberal economists from the Chicago school,” recounts Chilean professor Andras Uthof, PhD in Economics from the University of California, Berkeley.
RBA Editorial Staff - The privatization of the pension system in Chile, which today even results in the suicide of elderly people due to the desperation of lack of resources, occurred during the dictatorship of Augusto Pinochet. “There was no democratic debate. This was decided between four generals of the Armed Forces and the advisory board of a group of neoliberal economists from the Chicago school,” recounts Chilean professor Andras Uthof, PhD in Economics from the University of California, Berkeley.
The "coincidence" is pointed out by the president of the São Paulo Bank Workers Union, Ivone Silva. The economic team of Paulo Guedes, the Minister of Economy in Jair Bolsonaro's government, is composed of Chicago's boys – including the presidents of the largest public banks.
Guedes has already made clear his sympathy for the model that destroyed public pensions in Chile, leaving millions of workers in poverty. And he stated that the pension reform proposal to be sent to Congress in February will include a capitalization system similar to the Chilean one.
The conversation between Ivone Silva and Professor Andras has three parts and can be viewed at [link/website address]. TV 247The next sections will be published on the 21st and 28th.
The pension system in Chile began to change in the early 1980s with the implementation of a mandatory savings market. As a result, pension funds were transformed into private pension fund companies that manage savings or capitalization accounts.
“The worker becomes a consumer of a financial service,” says the professor. And the State was responsible for the cost of the transition to end the previous system, which resulted in 4,5 percentage points of Chilean GDP, causing a real deficit in the sector. “This is an element that must be looked at very carefully if the same is to be done in Brazil,” says Andras. “It is the hidden history of the Chilean system.”
Tragically, it took the state 26 years to realize that the system does not pay good pensions to Chilean workers. There is no defined benefit, nor a clear rule on how much will be paid. "The worker's only role is to save, save. When they want to know how much they will receive, they are told to keep saving. All the risks are borne by the worker."
Watch the first part of the interview below: