Privatized Social Security a failure in Chile

This article from the CWA union newspaper discusses the results of Chile's privatization of Social Security in 1981. According to the article, while the privatized system in Chile is good for investment companies and big business, it does not deliver security in retirement for working people.

In a 2004 report on human development in Chile, the United Nations Development Program found that:

• Half of Chile's six million workers will not qualify for any Social Security benefits when they retire.
• Another 25 percent will save so little, due to low salaries and high investment account fees, that they will only get the guaranteed poverty-level benefit.
• Chile's private pension companies collected $4.5 billion in fees between 1982 and 1988, "more than a fifth of net contributions to the system."

The New York Times reported Jan. 27 that many who stayed in the public system are drawing higher pensions today than those with private accounts.

As studies by the United Nations and others predicted, Chile is facing a large and growing crisis of senior poverty and the need for the government to take care of those the private system can't.

Chilean Minister of Labor and Social Security Ricardo Solari told the Times, "It is absolutely impossible to think that a system of this nature is going to resolve the income needs of Chileans when they reach old age."

It's worth noting that Chilean dictator General Pinochet knew that Social Security was much better than the private system being forced on the Chilean people: He kept Social Security and national health care in place for the armed forces and police who enforced his dictatorship.