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SANTIAGO, April 13 Chilean President Michelle
Bachelet announced on Wednesday evening that she was sending to
Congress a bill that would dramatically increase the size of
public pensions in the face of growing opposition to the
nation's current system.
The bill would include an increase in the amount of savings
held collectively, a new 5 percent payroll tax, and a
corresponding boost in retirement savings. Current pensioners
would see savings rise by around 20 percent, while workers
currently paying into the system would see increases of up to 50
"We must advance toward a truly mixed social security
system, where all play their part, where solidarity comes from
personal effort, where the state and employers play their
corresponding role," Bachelet said in a speech.
Chile's privatized pension plan was started in the 1980s
during the dictatorship of Augusto Pinochet, and the so-called
'Chilean model' has been copied and adopted worldwide.
But opposition to it is rising in Chile, with regular street
protests demanding changes. Opponents say the payouts are
meager, and they complain the pensions are managed by for-profit
It is unclear if Bachelet's bill can become law. Her
governing coalition is severely divided, and parliamentary
elections are set to take place in November, while debate on
complex bills can take years in Chile.
Earlier in April, Chile's finance minister said divisions in
the government might make any pension reform impossible, and
earlier this week, a major education bill pushed by Bachelet
failed in committee.
Under the system proposed by Bachelet, the new 5 percent tax
would be divided into two parts and have a six-year
implementation period. Three percent would go into the personal
savings of each worker, while 2 percent would go into a
collective account, managed by the state.
The bill would also give pensioners more say in the
investment decisions of the pension investment funds, known as
(Reporting by Gram Slattery and Antonio de la Jara; Editing by