Chile's pension system a hot issue in elections-related debate

The Chilean pension system became a hot issue in a debate on Friday (Apr 19) between the economic advisors of several candidates that are looking to run in the upcoming presidential elections. The South American country will hold presidential elections in November and internal primaries will be held in June. Topics like extending the retirement age, improving competition among the country's private pension fund managers (AFPs) and the creation of a state-run pension fund managerwere all discussed. Chile will not raise the age of retirement during President Sebastián Piñera's term, said social security undersecretary Augusto Iglesias this week - leaving the issue for the next administration and also turning it into an election issue. The advisors of the five candidates present on Friday agreed that changing demographics may force a change to the country's retirement age, which is currently 65 for men and 60 for women. However, they also recognized that the political cost of such a change - especially among women - could be high and that there needed to be a "transversal" consensus across party lines before embarking on any big reform to address this issue Former and highly popular president Michelle Bachelet - who is running again this year - said earlier this month that she would be in favor of a state-run AFP. The Bachelet camp's representative was not present at the debate. José Ramón Valente, advisor to former public works minister Laurence Golborne from the center-right coalition, La Coalición por el Cambio, said that he sees no good reason for the creation of a state-owned AFP and expressed fears that such a move could lead to the state looking to take over the private pension system - like in Argentina in 2008. Independent leftist candidate Marco Enríquez-Ominami's advisor Andrés Solimano, said that it was time for Chile to get out the AFP "straight jacket" and create a state-run pension system that would exist alongside the private one and be funded together by employees, employers and the government. That way, the Chilean public would have a real choice between a private and a state-run alternative, he said. To increase competition and reduce commissions in the AFP system, Alejandro Micco and Luis Felipe Céspedes, the advisors of Christian Democratic candidate Claudio Orrego and former finance minister Andrés Velasco, said they were in favor of expanding the scope of an existing tender system that auctions new affiliates to the AFP that offers the lowest commission. They did not provide any detailed proposals on this idea, but Céspedes said that the current tender system had been "extremely effective" in lowering commissions.