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EL SALVADOR: The Uphill Fight for a Disability Pension

Edgardo Ayala

SAN SALVADOR, Oct 18 2011 (IPS) - Eric Saúl Majano stares blankly up at the ceiling in the government office in the Salvadoran capital that he is visiting to seek a disability pension, since he has been unable to work since 2002 due to schizophrenia. But achieving his goal will not be easy.

“I see and hear things that aren’t real; that’s why I can’t work,” Majano, 37, explains to IPS after leaving the doctor’s office where he was examined.

Since El Salvador’s social security system was privatised in 1998, 35 percent of the 18,000 workers who have applied to the government commission that evaluates eligibility for a disability pension, the CCI, have been turned down after medical exams on the grounds that their degree of disability does not warrant a pension under the new rules.

The law establishes that in order to be eligible for a partial pension, the disability or impairment must be at least 50 percent, and for a full pension, 70 percent.

But people seeking disability pensions say the CCI is under pressure to rule against workers in order to benefit insurance companies, which cover risk of disability and death.

“The Commission should be more fair; it should look out for people’s interests, and its rulings should not be handed down to please the owner of a company,” Dinora Roldán complained to IPS. The 54-year-old woman, who has epilepsy, sued the CCI in 1999 because it only awarded her a 35 percent disability rating, which made her ineligible for a pension.

Roldán’s case went all the way to the Supreme Court, and after a 12-year legal battle, she will finally begin to receive a pension this month.

A full disability pension in the private social security system is just over 200 dollars a month.

The pension system in this Central American country was privatised along the lines of the Chilean model, moving from a government-run pay-as-you-go system to one of individual accounts for workers administered by private operators.

Since then, more than two million people, or 37 percent of the population, have been required to shift to the new system – an attractive business opportunity for the pension fund administrators, whose source of clients is guaranteed by law.

Only workers who were over 50 in 1998 remained in the old public institutions, which were gradually phased out as participation in the new system was mandatory for the rest.

There have been constant complaints that the rules tend to benefit the financial groups or business owners who run the system, with stricter requirements, for example, when it comes to granting disability pensions or death benefits.

The system includes two pension fund administrators, or AFPs, which charge administrative fees of 1.2 percent of the 13 percent of the workers’ salaries that are contributed to the retirement accounts, and insurance companies, which charge a 1.5 percent fee to cover risk of disability or death.

As of September 2010, the insurance industry had earned 324.7 million dollars in the new system. Of the 20 companies in the sector, only a few won the tender to offer disability coverage to AFP clients.

By law, the insurance companies have a voice, but officially no vote, in CCI decisions. However, many workers say that, given the companies’ economic clout, their presence on the Commission is likely to influence its rulings.

This is the view held by Mauricio Edgardo Canizales, a 37-year-old worker who applied for a pension in 2009 when his back, pelvis and leg were broken in an accident, but has not yet received it.

Canizales now has a limp and cannot lift things because of what he describes as terrible back pain, which makes it impossible for him to return to his job as a skilled machine operator.

But in an October 2009 decision, the CCI denied him a pension because he had not yet completed his treatment and rehabilitation.

And when the rehabilitation period ended this year, Canizales was once again denied a pension when the CCI awarded him a 37 percent disability rating.

“Maybe the Commission would only give me a pension if I showed up paraplegic, in a wheelchair,” he complained. “For two years I haven’t worked and have had no pension; our family is supported by my wife’s salary.”

But Omar Iván Martínez, assistant superintendent of pensions, denied that the insurance companies swayed the decisions of the CCI to benefit the industry.

“The insurance companies have a right to complain, and of course they are listened to, as a concerned party. But the Commission has rarely issued a ruling that had to be changed later (because it was influenced by the insurance companies),” Martínez told IPS.

The official argued that a balance is needed between the needs of workers and the system’s financial health, and that balance, he said, is provided by the “objective” rules on the evaluation of degrees of disability, which determine “with certainty” who merits a pension.

But people who have failed to obtain a disability pension say the rules are interpreted in a way that hurts workers.

That was demonstrated by the case of Roldán, the 54-year-old woman with epilepsy who took the CCI to court.

In 2004, the Supreme Court ruled that the CCI’s decision was overly narrow, because it awarded her a 35 percent disability rating based on the vertigo she suffers, while ignoring her epilepsy as a pre-existing condition that she had before she entered the labour market.

“Although the essential function of the Commission is to evaluate degrees of disability and not diseases as such, assessing whether all of the illnesses together influence the ability to work forms part of its work,” the Court ruled.

The Supreme Court ordered a new evaluation by the CCI, but Roldán had to wait until this year to find out whether or not justice would win out in the end.