After a Quarter Century Trial, the Results Are In: Chile's Private Pension System Has Failed
Dec. 9, 2004 (EIRNS)Manuel Riesco, director of the Center for Alternative National Development (CENDA) whose Jan. 2004 study documented that Chile's private pension funds are the most "protected industry in Chile's history, told EIR in a brief discussion today. Promising to send material, Riesco said the situation can be summarized as follows:
After a quarter century trial of the privatized pension system, there is now a consensus in Chile among the government, the private pension funds (AFPs) and thinktanks like CENDA, and supported by the World Bank, too--that at least one-half of the population can NEVER accumulate sufficient capital to earn even the minimum pension of $100 a month under this system. While it is CENDA's estimate that two-thirds of the population will never qualify for a minimum pension, the government and the AFPs each published separate studies this year which admit that at least half the population will never qualify. And this, he emphasized, is after the years in which the average rate of return for the AFPs was 10%, a period which has ended, and will never occur again. What will happen when the average rate of profit of the funds is 3%, 2%, at most?
It has been a quarter century experiment, and the results are uncontestable: this system doesn't work, he said."