MercoPress. South Atlantic News Agency

Chile revamps famed pension system

Chile's President Bachelet speaks during the second anniversary of her government

Some 600,000 poor Chileans will receive monthly pensions starting in July under a law signed Tuesday by President Michelle Bachelet that plugs gaps in Chile's widely copied private pension system

Bachelet, who signed the legislation on her second anniversary as president, called the measure "one of the most important social reforms in decades." The $2 billion a year program covers groups left out by private pensions â€" the poor and self-employed, housewives, street vendors and farmers who saved little for retirement â€" granting about a quarter of the nation's work force public pensions by 2012. Monthly pensions will start at about $125 and will rise next year to $158. That will boost pensioners above the urban poverty level of $95. Dictator Augusto Pinochet established Chile's private pension scheme in 1981 as part of a push to privatize the economy. The system required salaried workers to deposit at least 10 percent of their wages into personal accounts managed by private pension funds. That created a huge pool of capital that spurred investment and helped produce Chile's economic "miracle." Many countries have since introduced similar systems. But the private system left out about a third of Chile's work force, including most of the 1.2 million people who work in its informal economy.(AP)