{"page":"\u003clink rel=\"stylesheet\" href=\"https://lessonplanet.com/assets/packs/css/resources-572d6a42.css\" /\u003e\n\u003clink rel=\"stylesheet\" href=\"https://lessonplanet.com/assets/packs/css/lp_boclips_stylesheets-f4d0de30.css\" media=\"all\" /\u003e\n\u003cdiv data-title='CHILE: PENSION FUNDS SYSTEM INTRODUCED 16 YEARS AGO IS SUCCESSFUL' data-url='/boclips/videos/5c54bf60d8eafeecae142ad4' data-video-url='/boclips/videos/5c54bf60d8eafeecae142ad4' id='bo_player_modal'\u003e\n\u003cdiv class='boclips-resource-page modal-dialog panel-container'\u003e\n\u003cdiv class='react-notifications-root'\u003e\u003c/div\u003e\n\u003cdiv class='rp-header'\u003e\n\u003cdiv class='rp-type'\u003e\n\u003ci aria-hidden='true' class='fai fa-regular fa-circle-play'\u003e\u003c/i\u003e\nVideo\n\u003c/div\u003e\n\u003ch1 class='rp-title' id='video-title'\u003e\nCHILE: PENSION FUNDS SYSTEM INTRODUCED 16 YEARS AGO IS SUCCESSFUL\n\u003c/h1\u003e\n\u003cdiv class='rp-actions'\u003e\n\u003cdiv class='mr-1'\u003e\n\u003ca class=\"btn btn-success\" data-posthog-event=\"Signup: LP Signup Activity\" data-posthog-location=\"body_link_boclips\" data-remote=\"true\" href=\"/subscription/new\"\u003e\u003cspan\u003e\u003cspan\u003eGet Free Access\u003c/span\u003e\u003cspan class=\"\"\u003e for 10 Days\u003c/span\u003e\u003cspan\u003e!\u003c/span\u003e\u003c/span\u003e\u003c/a\u003e\n\u003c/div\u003e\n\u003c/div\u003e\n\u003c/div\u003e\n\u003cdiv class='rp-body'\u003e\n\u003cdiv class='rp-info'\u003e\n\u003cdiv aria-label='Hide resource details' class='rp-hide-info' role='button' tabindex='0'\u003e\u0026times;\u003c/div\u003e\n\u003ci aria-label='Expand resource details' class='rp-expand-info fai fa-solid fa-up-right-and-down-left-from-center' role='button' tabindex='0'\u003e\u003c/i\u003e\n\u003ci aria-label='Compress resource details' class='rp-compress-info fai fa-solid fa-down-left-and-up-right-to-center' role='button' tabindex='0'\u003e\u003c/i\u003e\n\u003cdiv class='rp-rating'\u003e\n\u003cspan class='resource-pool'\u003e\n\u003cspan class='pool-label'\u003ePublisher:\u003c/span\u003e\n\u003cspan class='pool-name'\u003e\n\u003cspan class='text'\u003e\u003ca data-publisher-id=\"30356011\" href=\"/search?publisher_ids%5B%5D=30356011\"\u003eCurated Video\u003c/a\u003e\u003c/span\u003e\n\u003c/span\u003e\n\u003c/span\u003e\n\u003c/div\u003e\n\u003cdiv class='rp-description'\u003e\n\u003cspan class='short-description'\u003eSpanish/NatA revolutionary private pension funds system introduced in Chile 16 years ago has  proven so successful that other Latin American countries are set to adopt it.The specialised pension fund management companies (A-F-Ps) that...\u003c/span\u003e\n\u003cspan class='full-description hide'\u003eSpanish/Nat\u003cbr/\u003eA revolutionary private pension funds system introduced in Chile 16 years ago has  proven so successful that other Latin American countries are set to adopt it.\u003cbr/\u003eThe specialised pension fund management companies (A-F-Ps) that manage the  system, currently administer assets of about 27 (b) billion U-S dollars --- more than 40  per cent of Chile's gross domestic product.\u003cbr/\u003eChile replaced its social security pension system with a privately run system of  individual pension plans in 1981.\u003cbr/\u003eThe military regime of General Augusto Pinochet phased out the old state system and  made the switch to the new funds compulsory for most workers.\u003cbr/\u003eThe management of the funds is entrusted to specialised pension fund management  companies known as Administradoras de Fondos de Pensiones (A-F-P).\u003cbr/\u003eThe new system has proven successful in many ways.\u003cbr/\u003eChile's pension fund administrators currently manage assets of about 27 (b) billion U-S  dollars --- more than 40 per cent of Chile's gross domestic product.\u003cbr/\u003eThey constitute the largest single group of investors in the Chilean stock market.\u003cbr/\u003eThe growth of the sales force behind the pension funds is proof of the robust health  enjoyed by the private schemes in Chile.\u003cbr/\u003eIn 1981, brokers of the private funds totalled 35-hundred. Today the number is 20- thousand sales staff for Chile's 13 funds. \u003cbr/\u003eSOUNDBITE: (Spanish)\u003cbr/\u003e\"This system has been very successful in Chile. It has given the workers benefits of  around 12 per cent above inflation for 15 years. But it has also had a big effect on the  economy because national savings have increased to 29 per cent of G-D-P, which is a  very high level for a Latin American country. That has also boosted economic growth  which, at the end of the day, is the only way of creating productive jobs and getting rid  of the poverty that has stricken our continent this century.\"\u003cbr/\u003eSUPER CAPTION: Jose Pinera, President of the International Centre for the pensions'  reform\u003cbr/\u003eThe new system -- which transfers the solvency and investment risk to workers--  is  supported by strong regulations and state guarantees that provide strong protection to  workers.\u003cbr/\u003eBut for some, the system has its flaws.\u003cbr/\u003eWorkers must contribute ten per cent of their monthly salary for the pensions plus an  additional amount -- around three per cent --to cover the operating costs of the  management companies.\u003cbr/\u003eCosts that could be cut down, unions say.\u003cbr/\u003eSOUNDBITE: (Spanish)\u003cbr/\u003e\"The insurance companies don't spend more than 0.8 per cent of that three per cent the  worker pays. That is, they keep more than two per cent, but there have not been any  changes in the system as to reduce what the worker has to pay. We think the  administrative costs are too high and there is an abuse there.\"\u003cbr/\u003eSUPER CAPTION: Jorge Millan, Unitary Workers' Union (C-U-T)\u003cbr/\u003eBut there is another problem. \u003cbr/\u003eThe state and the employer don't contribute with anything for the pension scheme.\u003cbr/\u003eAnd not only that, but the employer, who has to deduct the pension money from the  employees' wages and put it into the A-F-Ps, sometimes fails to do so.\u003cbr/\u003eSOUNDBITE: (Spanish)\u003cbr/\u003e\"What happens is that many employers not only declare (they have deducted from the  worker's wages) and don't pay, but they stop paying altogether. And there are workers  with big pension flaws because the money the employers discount from their wages to  pay the A-F-Ps never get there. And there are currently more than 150-thousand --150- thousand! -- pension trials pending in Chile.\"\u003cbr/\u003eSUPER CAPTION: Jorge Millan, Unitary Workers' Union (C-U-T)\u003cbr/\u003eThe success of the Chilean A-F-P system is underscored by the rapid expansion of  coverage.\u003cbr/\u003eMembership rose from 38 to 95 per cent of the labour force over 1981-94.\u003cbr/\u003eBut this near universal coverage may be misleading, as a large number of affiliates are  not active contributors.\u003cbr/\u003eWhile there are 5.4 (m) million workers affiliated with the pension system, only 2.7 (m)  million pay their fees.\u003cbr/\u003eThat will most likely cause a problem when these people retire and don't have a  pension.\u003cbr/\u003eBut for the time being, the success of the new pension scheme in Chile has lead to its  implementation in Argentina, Peru and Colombia.\u003cbr/\u003eUruguay, Mexico, Brazil, Bolivia and El Salvador are set to begin the schemes soon.\u003cbr/\u003eAnd analysts in developed countries are looking very closely at what they say could be  the ideal pension system for the 21st century.\u003cbr/\u003eSantiago de Chile, Chile, 21 March 1997\u003cbr/\u003e1. Wide shot of people at A-F-P, pension management company\u003cbr/\u003e2. Close-up of client with agent\u003cbr/\u003e3. Midshot of client with agent\u003cbr/\u003e4. Various of A-F-P companies\u003cbr/\u003e5. SOUNDBITE: (Spanish) Jose Pinera, President of the International Centre for the             pensions' reform\u003cbr/\u003e6. Various of people at A-F-P\u003cbr/\u003e7. SOUNDBITE: (Spanish) Jorge Millan, Unitary Workers' Union (C-U-T)\u003cbr/\u003e8. Various of street scenes\u003cbr/\u003e9. SOUNDBITE: (Spanish) Jorge Millan, Unitary Workers' Union (C-U-T)\u003cbr/\u003e10. 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