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FUNDS WITHOUT FUNDS: THE CHILEAN CASE
Manuel Riesco
OCTOBER 2009 (IPS) - Chile's private pension system lost 30 percent of its overall value
during the current financial crisis, writes Manuel Riesco, a
Chilean economist, vice president of the Centre for National
Studies of Alternative Development (CENDA), and director of the
Foundation for Overcoming Poverty.
In this analysis, Riesco writes that the public pension system was
privatised in 1981 by the government of General Augusto Pinochet.
Participants in the public system were pushed to switch to the
Administrators of Pension Funds (AFP) without the possibility of
switching back, assured that they would receive better returns and
handsome pensions.
Administrative costs have been scandalous: the AFP and related
insurance companies have pocketed one-third of all contributions to
the system since its creation in 1981. Meanwhile, for workers with
equivalent work history, pensions of those who stayed in the public
system have been double those in the AFP plan.
(*) Manuel Riesco, a Chilean economist, is vice president of the
Centre for National Studies of Alternative Development (CENDA) and
director of the Foundation for Overcoming Poverty.
//NOT FOR PUBLICATION IN CANADA, CZECH REPUBLIC, IRELAND, POLAND,
THE UNITED STATES, AND THE UNITED KINGDOM// (END/2009)
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