2023-08-22 11:36:18
Eyes on the possibility of reaching an agreement on pension matters are currently focused on the political world. However, technicians are closely following the debate.
In this desire to reach a consensus and bearing in mind that the formula for the 6% additional contribution traps the possibilities of bringing positions closer, some sectors -as Democrats- have promoted or at least indicated that the possibility of Create longevity insurance.
The idea is not new. In fact, there are several proposals, like that of the former superintendent of Pensions, Guillermo Larraín; that of the current president of the Commission for the Financial Market (CMF), Solange Berstein and Marco Morales; and that of Senator Ximena Rincón.
Some sectors, such as Democrats, have promoted that the possibility of creating longevity insurance be studied. However, the instrument does not generate consensus.
However, longevity insurance It is far from generating a transversal agreement.
It’s more, It is a possibility that worries some technicians. So much so that, in early August, renowned actors from the technical world, members of Espacio Público -Paula Benavides, Andrea Repetto, José de Gregorio, Eduardo Engel and Patricio Domínguez- set off the alerts through an opinion column.
Paula Benavides, economist and executive president of Espacio Públicoassured DF that “longevity insurance is a risky bet that in practice can end up diverting the discussion and making lose the small window of opportunity that still remains for a reform”.
This, because in his opinion, interest has been seen on the part of some sectors in the instrument, but not so a specific design proposal that has been presented to the Government, accompanied by actuarial and feasibility studies that sustain it
“Although there are previous academic studies with very different designs, any discussion today should take place based on concrete proposalsthat specify the designs and transitions considered, the form of financing and how the problems of regression, implementation and articulation with the pension system that it is known that a longevity insurance can have are solved in practice, ”he said.
For Guillermo Montt, Principal Specialist in Social Protection of the ILO, “it is an idea that seems, in principle and in theory, attractive for the Chilean context because it could improve self-financed pensions by incorporating an insurance mechanism”, however, raises several concerns.
The expert stated that sees it difficult for insurers to be interested at convenient prices and that, on the other hand, questions about financing of this mechanism and the transition to its implementation.
In this context, he explained that, if it is financed with current contributions, longevity insurance can be thought of as a mechanism for intergenerational solidarity, but warned that “more regressive than others we can devise, since those who finance the insurance are everyone, but the people who usually have the longest survival are the people who had the best income in their working lives”.
Meanwhile, if it is financed with a premium that is acquired during one’s career, Montt wonders, how do we finance people who today have greater longevity? “If we want to offer better pensions today and if it is not intended to be jointly financed, then the State would have to finance it, but I do not see fiscal space to add the financing of an insurance, which in addition to the fiscal pressure that the PGU means, is uncertain and regressive”,held.
For his part, he lawyer Alejandro Charme, who was the representative of RN in the technical table and is a former prosecutor of the Superintendence of Pensions, He agreed with Montt that he would deliver regressive benefits and that it is “almost impossible” for insurers to be interested in this insurance. “Therefore, we are talking about a Collective Fund that will receive contributions that are invested in the capital market to pay a longevity pension to those who survive a certain age”, he stated.
In this context, he adds an additional concern: “If this institution will finally become a Collective Longevity Fund there is a political risk that its resources are used for other purposes, which results in a greater danger, since its purpose will be to pay the pensions of the elderly in our country, to whom we cannot leave devoid of a pecuniary benefit to satisfy their needs”.
Democrats defend the instrument
For Fuad Chahín, representative of Democrats in the technical board for pensions, longevity insurance “ends the hateful mortality tables at 110 yearsalso with a penalty for women and allows for an impact on current pensions on the basis that we propose financing with an advance against future flows and recalculate all pensions to 85 years and that has a significant impact on the rate increase replacement”.
Regarding the criticisms that have been raised about the regressiveness of the instrument, the former deputy defends it: “The most regressive and unfair thing is what we have today, that the poor are punished with low pensions because they are calculated on mortality tables which are not applicable to them.their life expectancy is lower.”
Regarding financing, he pointed out that “it is relatively cheap” and that with 1.8 contribution points “a pension of the order of 90% of the contributory pension can be financed up to the age of 85”.
And finally, regarding the question of whether or not there was interest from the industry, he stated: “If there are no private companies interested, then let the State actthat the State has a public insurer that can do it”.
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