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Judi Lynn

(160,211 posts)
Mon Aug 22, 2016, 12:08 AM Aug 2016

Chileans protest against Pinochet-era private pension scheme

Source: BBC News

Chileans protest against Pinochet-era private pension scheme

4 hours ago



AP
Organisers said more than one million people joined demonstrations across Chile



Hundreds of thousands of people across Chile have taken part in protests against the country's controversial privatised pension plan.

The scheme was launched in 1981, during the military government of General Augusto Pinochet.

Protesters say some 10 million people who joined have now been left with very low retirement incomes - less than minimum wage in many cases. They are calling for President Michelle Bachelet to scrap the scheme.

The Chilean pension fund system has been praised by pro-market politicians and economists across the world.

Read more: http://www.bbc.com/news/world-latin-america-37151345

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yellowcanine

(35,692 posts)
2. If I remember correctly Milton Friedman advised Pinochet on the pension scheme among other things.
Mon Aug 22, 2016, 09:34 AM
Aug 2016

Friedman being second only to Saint Ronald in the eyes of the small government crowd.

LiberalLovinLug

(14,153 posts)
3. President Michelle Bachelet is head of the Chilean Socialist Party
Mon Aug 22, 2016, 03:12 PM
Aug 2016

What is going on here? I admit I don't know much about Chilean politics but that sounds like an odd move for her.

forest444

(5,902 posts)
4. Neighboring Argentina abandoned this scam in '08 - and seniors are earning twice as much as in Chile
Tue Aug 23, 2016, 03:35 PM
Aug 2016

What never gets mentioned by Social Security enemies or Pinochet apologists is that the Chilean pension model is described by Chileans themselves as el gran fracaso - "the great failure." That's why no one else will adopt it - and the few countries that did, have since abandoned it.

Others call it el gran fraude - "the great fraud." This is mainly because each retirement account pays 30% commissions from the top. Consequently, 70-80% of Chilean retirees end up with nothing or close to it in their pension accounts and depend on a state subsidy to cover the minimum $200 pension Chilean law guarantees - and Chile's expensive.

Pinochet, btw, left out the police and military from the scheme; they get state-run, $1,500 pensions.

So that's a "private" pension system for you: the profits are private, but the state, in Chile's case, spends 6% of GDP - one third of its federal budget - on bailing out retirees with hollowed-out pensions.

Chile can afford to do this thanks to its copper - which nets it $40 billion in exports and mostly remains state-owned.

Neighboring Argentina had a similar experience. After 14 years of having to bail out private pensions (while the pension funds wired billions overseas), the country nationalized its pensions in 2008. Argentina did keep the private option - but almost nobody takes it. Minimum pensions in Argentina thus rose from $50 a month to $440 by the time Cristina Kirchner left office in 2015.

The Buenos Aires Stock Exchange (which used to treat pension funds as its dumping ground for unwanted shares) doesn't like it, and they're hoping Macri re-privatizes them (as he proposed doing years ago). He hasn't tried to yet; but seniors' advocates will definitely need to keep an eye on him.

Thanks again, Judi, for keeping an eye on this important story - which so few people know about, but should.

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