In Chile. According to both the candidate of the Left and the Right.
Michelle Bachelet is a pediatrician and a Socialist, while Sebastián Piñera is a billionaire businessman and a conservative. They may agree on little as the opposing candidates in Chile's election for president, but they concur on one important point: the country's much vaunted and much copied privatized pension system needs immediate repair.
The Chilean system of personalized accounts managed by private funds has inspired a score of other countries since the pioneer effort to create it here 25 years ago. It is endorsed by President Bush, who has called it "a great example" from which the United States can "take some lessons." Here at home, though, dissatisfaction with the system has emerged as one of the hot-button issues in the election, a runoff that will take place on Sunday.
"Most people perceive the costs of pensions and the pensions themselves as unfair," said Patricio Navia, a political science professor at New York University and at Diego Portales University here. "Many of those who started work when the system was first adopted are realizing that they have not been able to contribute enough to get a significant pension," Mr. Navia said, adding that they resent "overhead costs that are so high" and that have led to record profits for the pension funds that manage contributions automatically deducted from workers' paychecks.
Lest we forget, this is the kind of scheme George Bush is still trying to sell us.
But why would he continue when it doesn't work?
According to a recent study here, Chile's pension funds, whose number has shrunk to 6 from more than 20 as competition has diminished, recorded an average annual profitability of more than 50 percent during a recent five-year period. Other studies, including one conducted by the World Bank, indicate that pension funds retain between a quarter and a third of workers' contributions in the form of commissions, insurance and other administrative fees.
Oh. That.
Then again, there are some people out there *cough* idiot Greens who voted for Nader *cough* who think a Leninist strategy to spur revolution isn't so bad. I'd not call the backlash in Chile a revolution, but the Socialist Party candidate is leading in the election. A Senator elect:
"I am going to do away with these thieves in jackets and ties," Mr. Girardi vowed. "We are going to defend the citizenry from these funds that rob people of their pensions."
In addition threats from the potential for backlash, there is also the functioning of the system itself:
"Chile's social security system requires deep reforms in all sectors, because half of Chileans have no pension coverage, and of those who do, 40 percent are going to find it hard to reach the minimum level," Mr. Piñera said in a televised debate with Ms. Bachelet on Wednesday.
Well, there's seomthing to aspire to...20% with at least minimum coverage. Zoinks!
Posted by binky at January 12, 2006 05:21 PM | TrackBack | Posted to Latin America