Chile’s President Michelle Bachelet proposed reforms to the national private pension pension system implemented under former dictator
Augusto Pinochet (pictured right).
Pinochet’s retirement system, once hailed by many economists as the fiscally-responsible answer to the problems of pay-as-you-go retirement systems
like Social Security, deteriorated in popularity with the Chilean public as the first generations to work under the system began to retire.
Though Pinochet’s plan bolstered the Chilean economy, its pensions only replace 38 percent of pre-retirement income on average, or $400 per month. The program’s architects
promised a 70 percent replacement rate.
Bachelet’s reforms would require employers to pay a tax to supplement the worker’s contributions to their pensions, boosting the payout for individuals.