Hundreds of thousands marched through Santiago and other Chilean cities Sunday to demand an overhaul of the private pension system, after President Michelle Bachelet's proposals for reform failed to placate many facing retirement on meager pensions.
Whereas tens of thousands marched through Santiago demanding change before the announcement two weeks ago, up to a million protested across the country Sunday, according to the organizers. The police put the number closer to 150,000.
The march will keep the pressure on the government to make more radical changes to a system that has amassed $176 billion in savings and underpins Chile's capital markets. Ms. Bachelet will find it hard not to listen after the popularity of her government fell to 15% in July, the lowest of any administration since at least 2000, according to a survey by the Center of Public Studies released last week.
“The feeling of anger is persistent, people have not understood the government's changes," said Jorge Selaive, the chief Chile economist at BBVA. “It is probable that people will keep demonstrating in the streets.”
Chileans receive an average pension equivalent to 38% of their final income, the lowest rate among the 35 nations of the Organization of Economic Cooperation and Development after Mexico. The founders of the system had indicated that it would be closer to 70%.
The pension system was created under the dictatorship of Augusto Pinochet in 1981, with the public given little say in the changes. It was subsequently copied by 33 countries, with nine of them copying the system in its entirety.
The system has failed to meet its founders' expectations because people didn't save as much as forecast. Whereas the creators of the system calculated that workers would make contributions for more than 30 years, a recent study by the Pension Funds Association found only one in four retirees saved money for more than 25 years.
"Even if Chile was the first country to implement this system, we didn't invest enough in educating people about the role of private pension funds and of the importance of saving under this system,” Mr. Selaive said.
Ms. Bachelet has proposed making companies pay contributions to the pension system for the first time. The extra payment, introduced gradually over the next 10 years, will go to a so-called solidarity pillar, rather than people's personal savings accounts, enabling the government to increase current pensions and achieve more equality in future pensions, the president said. Until now, only workers paid money into their private savings accounts.
The proposals weren't enough for yesterday's marchers, who wanted the government to shoulder a greater share of the responsibility for pensions.
If the government “doesn't listen to the workers, who are the owners of these funds, then the way forward is a national strike on Nov. 4,” Carolina Espinoza, a spokeswoman for the campaign to reform the pension system, told the protesters.