SANTIAGO, Chile – Over 600,000 Chileans marched down the streets of Santiago while over 400,000 marched elsewhere around the country in protest of the privatized pension system, another holdover of the dictatorship of Augusto Pinochet (1973-1990).
The marches, which were held peacefully in 50 cities and 250 municipalities nationwide, brought over a million Chileans out onto the streets. The day’s events were organized by No Más AFP or No More AFP, referring to the government’s Pension Fund Administration.
“We are a group of citizens that are conscious of the fact that when you reach our age, our standard of living deteriorates substantially given that we retire through the AFP and we earn a pension that amounts to just one-third of the salary we earn before we reach retirement age,” the group said.
Citing figures from the 34-nation Organization for Economic Cooperation and Development (OECD), of which Chile is a member, No Más AFP said that “the vast majority of the OECD member nations (and all developed nations) have a pension system in which the pensions of retirees amount to some 70 percent of the wages they earn before retiring.” In some nations like Holland and Austria, the rate climbs to over 95 percent.
In those developed nations, the public pension system is tripartite: it is financed by contributions from the employer, the employee and the government and a “private pension system is only a complementary option and never a complete substitution, unlike in Chile where a private pension system is the only option.”
“In the Chilean case, despite the fact that the small group of incredibly wealthy and consolidated AFP providers have spent millions of dollars on marketing their system as being successful, statistics show that Chilean men earn only 38 percent of the salary they earned during their working period while for women, the numbers are even worse as their pension is at only 28 percent of their earnings,” the organization said.
The creators of the AFP system said that pensions would only improve as a result of competition; they said that there would be over 20 different companies that compete for membership that would provide better and higher pensions and services for the retirees.
“This never occurred, however, as only six AFP providers (who manage over $170 billion in assets among them) are currently active and they work together in keeping the pensions and services far below standards as an oligopoly.”
The worst part for No Más AFP, however, is that the existence of a Superintendency of Pensions agency, a government oversight organization of sorts that is supposed to oversee the AFPs, is practically nullified.
This is because after the employees of the agency leave, they “go to work for the AFPs directly or indirectly and receive very lucrative salaries from those companies or their subsidiaries,” in that their work at the agency prior to their leaving is simply posturing for their futures and nullifying the oversight process by letting the companies do what they want unchecked.
Luis Messina, the national coordinator of No Más AFP, explained that as a result of Chile’s pension system, over 90 percent of Chilean retirees receive a monthly pension of less than 154,304 pesos or just under $233; this means that these retirees’ monthly pensions are less than half of the established Chilean minimum wage. Furthermore, this means that 45 percent of Chilean retirees fall below the poverty line.
The main demonstration in Santiago, which brought out over 600,000 people, went from the Plaza Italia in the east to Plaza Los Héroes in the west along the central Alameda Avenue and passed the most important buildings of government in hopes of attracting more attention from the pertinent authorities.
The demonstrators carried signs saying “AFP: Retirement of Hunger,” “We want decent pensions and no more crumbs” and “The AFPs must die so that the pensioners can live.”
Messina, the No Más AFP coordinator, took to the stage at the end of the march to hail the number of people that came out and to remark on the dignified and peaceful manner of the march. “We swear today that we will not rest until our retirement savings stop to serve the economic groups and serve their rightful owners: the workers that earned these savings,” he said.
“We are very happy with the turnout, which brought more Chileans out onto the streets than we expected, and we are very satisfied that we had a major public demonstration that was driven purely by grassroots organizations and citizens that was carried out peacefully while getting our message across,” said Messina.
“Chile has woken up and the government can clearly see now that they need to listen to us,” Messina said, but he added that if no concrete plans for action are made by the authorities, his organization will call for a nationwide strike backed by several of the nation’s largest labor unions in early November.
President Michelle Bachelet of the Socialist Party, who served as President of Chile from 2006 to 2010 and left office with very high approval ratings but was constitutionally barred from re-election, returned to the nation’s top political position in March of 2014.
Since she returned, she has started initiatives to pass major reforms in the areas of the economy, education, health and political procedure and given the busy and ambitious schedule, the issue of the pension system has taken a backseat, at least until now.
Shortly after the march, Bachelet promised to propose a series of measures soon to improve the pension system. Among these proposed changes would be an additional 5 percent contribution by employers, a higher minimum pension wage, the mandatory contribution by (often wealthy) self-employed individuals, the elimination of high AFP processing fees and the creation of a seventh AFP that would be controlled not by a private company but by the government.
Critics of the proposals, however, say that any of these changes are only helpful for future generations and would do nothing to help those currently receiving pensions.
The current pension system, known officially as the Sistema Previsional de Chile, was signed into law in 1981 during the dictatorship of Augusto Pinochet, who came into power on September 11, 1973 by staging a violent coup against the democratically-elected leftist Salvador Allende. Pinochet would then lead Chile with an iron fist for the duration of the dictatorship, which finally ended in 1990.
Over 40,000 people were victims of grave human rights abuses in the South American country during the dictatorship, including kidnapping, torture, rape, forced disappearance and murder, and that number could be even higher according to some estimates. Additionally, some 200,000 Chileans were forced out or fled their country during the dictatorship, with tens of thousands still in exile.
This was part of Operation Condor, a period of systematic political repression and state-sponsored terror involving cooperating international intelligence organizations conducted by the right-wing dictatorships of South America, including Argentina, Bolivia, Brazil, Chile, Paraguay, Peru and Uruguay. This was all done with the staunch financial, logistical and political support from the United States. The program’s purpose was to “eradicate communist or Soviet influence and ideas,” and to suppress and eliminate any opposition, real or imagined, against those dictatorships.
The dictatorship officially ended in 1990, but democracy did not return before Pinochet and many other Armed Forces officials took measures to protect themselves in the aftermath. Those individuals greatly benefited from the Amnesty Decree, a law enacted by Pinochet in 1978 that prevents any figures from facing justice due to crimes committed during the dictatorship.
Furthermore, a provision in the transitional Constitution drafted by Pinochet in 1980, the one that still stands today (and is the target of overhaul by Bachelet in the form of an entirely new Constitution) allowed him to serve as Commander-in-Chief of the Armed Forces for another eight years after he stopped serving as President in 1990.
The continued existence of that same 1980 Constitution ensures that many remnants of the dictatorship are present in modern-day Chile in the form of the systems that dictate aspects of the economy, education and healthcare, including the pension system which was drafted by José Piñera, Pinochet’s Labor Minister, that same year.
Piñera, a Harvard-educated economist by trade who, like Pinochet, was implicated in the human rights violations committed during the dictatorship, designed the pension system that is based on one’s personal retirement accounts, market fluctuations and private investment funds.
Influenced heavily by the neo-liberal policies of the Chicago School economists (known collectively as the “Chicago Boys”), which led to the enrichment of the wealthy, the further fall of the poor and the broad widening of the inequality gap across Latin America, Piñera abolished the standard public pension system and introduced the privately managed AFPs, into which all Chilean workers needed to pay in at least 10 percent of their monthly salary.
Unsurprisingly, Piñera and other Pinochet government officials, along with the entire military and police, had the choice to opt out of the new system and did just that.
In short, almost half of the Chilean population is not covered by the pension system (but does receive a meager government stipend) and nearly 40 percent of those that are covered find it difficult to pay into the AFPs minimum requirements. The result, then, is a very poor return (of some 30 percent of salaries, as pointed out by Messina) on pensions for workers with lower incomes, leading to what the vast majority of Chileans say is an “undignified old age” after decades of paying into the system.