Chile introduces a new pension safety net for the elderly poor.

SOURCE: Sign On San Diego—“Chile’s pioneer private pension system add public payouts for poor”

Chile’s privatized social security program will see a big change this coming Tuesday (March 11). The plan as it currently exists only has payouts for those who pay in—a situation that has left those who spend their working years either un- or underemployed with insufficient fund to draw on in old age. As one retired maid whose pension fund is about to run dry put it: “[s]ometimes old age lasts a long time.”

But the program that is to be become law on Tuesday revamps this system, setting up a universal safety net that guarantees the elderly poor a monthly income above the national urban poverty level.

Chile, which has enjoyed a prosperous economy in part due to foreign investment in its privatized pension funds and the high price of copper last year, currently has sufficient funds to support the program, but some economists have raised concerns that it is too generous and could hurt the national economy in the long run.

Others assert that the extra expense in pension payouts will be offset in part—though not full—by decreases in healthcare spending. It is suggested that if Chile’s elderly poor have enough money, they will take better care of themselves and require fewer drastic and expensive healthcare interventions.

Still other observers note that Chile has succeeded with privatization in the pension area thus far and that the expansion of the program to assist the elderly poor is an extension of this success—Chile’s program, they say, is adapting to the needs of the people.

FOR DISCUSSION:

Some critics assert that Chile’s program is too generous to the elderly poor. What is the purpose of a nation if not to serve (all of) its citizens?