2024-12-17 04:44:00
“The only thing we are saying today is that the issue of equal conditions between men and women, We need to find the best possible mechanism to solve it.. And it seems like the best possible mechanism is Disability and Survivorship Insurance (SIS).” This is what the senator and president of the RN, Rodrigo Galile, revealed last Sunday at the Central Table of Canale 13.
The truth is that this formula, confided by Senator Galilea, is a mechanism that was strengthened in the negotiations between the government and the Chilean senators just last week, after the controversies that broke out when the president of the UDI was a deputy Guillermo Ramírezstressed that 0.5% should be granted to equalize pensions between men and women, for which he used the concept of “distribution”which aroused strongly criticism from Republican Party.
The idea that women, at the same retirement age as men, and with the same cumulative balance, can have the same pension, and that they do not receive an 11% lower pension due to their longer life expectancy, is a issue that generates consensus between different political parties, both right and left, which has been called the “bonus plan”. Even in the technical world there is consensus. The underlying question is what mechanism should be used to achieve this objective and how much such compensation costs.
Of the total additional contribution of 6% proposed by the project, the government had initially talked about allocating 1 point of the contribution for this purpose. Vamos from Chile, however, estimate that only 0.4 or 0.5 percentage points would be enough to finance it.
In any case, Galilea confessed that what they are considering now is that this compensation is not included in the 6% contribution proposed by the pension reform, but the idea is rather to generate compensation for women through the SIS. “The most likely thing is that the issue will be resolved without anything to do with the 6% of contributions, but will most likely be resolved by consolidating and strengthening another legal mechanism to which the employer contributes, which is the SIS, which is money that the employer pays its workers every month for cases of disability and survival. Therefore, it is very likely that the issue of equalizing the age conditions of men and women for pensions will be resolved by consolidating this mechanism, probably adding an extra 0.5%.
There are those who even estimate that in the contribution that employers pay for the SIS there could be money available to be used for this purpose, especially if improvements were made to the mechanism. In any case, neither the government nor the opposition have explained how this new mechanism now on the table would work.
How does the SIS currently work? Although the AFPs are responsible for providing benefits in the event of disability of their members (if they meet the requirements) or death, as a whole they are also obliged to contract the so-called SIS, for which they must carry out a public tender to assign it , which is precisely the one in charge of financing these benefits and which assigns it to the life insurance company or companies that present the best economic offer.
It is the largest insurance group currently present in the country, covering more than 7 million people. In the case of employees, The SIS is funded entirely by employers. When it comes to self-employed workers or voluntary members, this insurance is financed by the members themselves. The SIS covers non-retired members under the age of 65. The coverage is different depending on whether they are members who contributed as employees, self-employed or unemployed.
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From October 2024, the current SIS rate for independent and voluntary employers and affiliates is 1.5% of wages and taxable income, for both women and men.
Although this quota may vary from year to year in each tender carried out, being higher or lower from time to time, the truth is that it is uniform for all members of the system. That is, all employers pay the same for each worker.
However, since here a cross-subsidy from women to men is generated, since in practice it is proven that women have lower disability and survival costs than men, having lower injury rates and greater longevity, there is a “return ” to women of that contribution paid by the employer, the difference being deposited into their individual account. The Superintendence of Pensions explained this in 2017 in a presentation: it was stated that there is a “separation of costs between men and women by charging a single premium, but ‘returning’ the cost difference for women to their individual capitalization account.”
In this regard, the academic of the PUC and the UDP, former prosecutor of the Superintendency of Pensions and former advisor to the deputies of the RN on pensions, Alejandro Charme, comments: “We must remember that the SIS for women costs from 0.3% 0.4% less than that of men, considering a contribution of 10%, because they are healthier or less at risk of disability. This difference is deposited into the woman’s account. So, men contribute 10% and women 10.3% or 10.4%. If I use that difference to pay the gender SIS premium, I lower the individual account balance and make the gender SIS more expensive. And if I keep it in mind, the SIS should cost less.”
In recent years, several actors have called for improvements to the SIS, as they believe that it does not function properly even in 2020, some tenders for this insurance have been declared null and void; One of the main factors is that there has been a significant increase in injuries, that is, the number of people collecting insurance to retire due to disability has increased. In fact, the number of applications submitted in 2019 to obtain a disability pension, and which are covered by this insurance, simply skyrocketed: it increased by 24%, for a total of 29,442 applications. In 2018 the increase was 10%.
But the average amount involved in each claim has also increased. The above, considering that what insurers who have obtained SIS have to do is that when a person applies for a disability pension, they have to cover the difference between the amount that the person has saved in their individual account and what they lack for be able to finance your pension and that of your survivors. But what has happened recently is that the amount people are saving has declined, at a time when the profitability of pension funds has also declined, as the returns that existed more than a decade ago can no longer be found in the market. added to withdrawals from pension funds.
The Insurers’ Association itself has called for improvements to the SIS. In fact, last year they proposed a change that in their opinion would free up resources to address other aspects, such as the so-called table bonus, which they called the women’s bonus. And how would those resources be released? “The SIS reform means that this insurance guarantees a pension equal to 70% of the taxable salary, just as happens today, but up to retirement age. This is equivalent to how the law on accidents at work works, which provides for a pension up to 65 years. And this is because we see that in the current structure of the system there are some asymmetries, primarily between occupational diseases or accidents at work with the common disease or common accidents, which we believe need to be corrected within the social security system . Furthermore, the current structure generates incentives for abuse of the validity system,” the president of the Association of Insurers, Alejandro Alzérreca, said last year.
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