President Michelle Bachelet on Friday proposed a shake-up of Chile's widely admired but incomplete private social security system, urging a minimum government pension for 1 million elderly Chileans left out of the current program.
The president's plan would ensure all retirees a monthly pension of at least 75,000 pesos ÃÂ¢€" about $141 ÃÂ¢€" to guarantee "the security of a dignified old age." Bachelet, speaking before an audience of retirees at the national palace, called the proposal "a central step" in creating a system that will support Chileans "from the cradle to old age." Social security reform was a central campaign issue for Bachelet, who was inaugurated in March as Chile's first female president. Under the current system, private companies administer funds contributed by employers or workers ÃÂ¢€" up to 13 percent of their monthly salaries. But many people remain outside the system in the country of 15 million people, an increasing share of which are elderly. Labor Minister Osvaldo Andrade said the new program would be phased in, probably starting in 2008 with about 500,000 people. Bachelet said it would eventually cover all 1 million people who now lack social security pensions, 60 percent of them women. Men would become eligible at 65 and women at 60. Women with living children also would be compensated for their historically lower earnings with a subsidy. On retirement, they would receive a bonus for 12 months on top of the pension, depending on the number of children they had. The current private system has assets of about $70 billion.