Analysis framework of the chilean pension system after the 2008 reform

Abstract

Since 1980 the pension funds system has called the attention of social security experts from Latin America, as well as Eastern Europe. The recent reform from 2008, that broadens the coverage of pensions, forces to rethink the Chilean model from a different perspective. While protection to the risk of growing old is done based on a sole logic model, based as well on tax related benefits, conformity to the pension law with principles of subjective universality must be analyzed. Both components of the Chilean system should be understood in order to appraise its coverage capacity to all the Chilean population. The first component includes a non-tax related mechanism provided by the State, responding to its international and constitutional obligations of protection to the population. The second component consists of mandatory and voluntary tax-related mechanisms that allow the population to obtain protection for aging. The complement to both of these mechanisms is what grants pension law its universal character. The retirement system has become a coherent whole, combining Universalism and Individualism to protect all of the population through a system with a sole logic.