A bill to create a new national pension system in Venezuela is expected to be introduced to the country's congress this week, according to Santander Investment.
The pension reform includes the creation of two funds: a fully capitalized fund (defined contribution) and a solidarity fund (defined benefit), according to Santander.
Workers and employers will contribute to both funds. The funds will be operated by the public and private sector.
But pension reform carries a substantial cost, estimated at U.S.$14 billion to $18 billion. To alleviate some of the pressure, the government may elect to raise pension taxes on workers. A local newspaper said that employers' contributions to the pension funds could reach 12% of workers' salaries from 9% currently. Employees' contributions would remain at 4%.
