Who is Jose Piñera? Well, once upon a time he was the Labor Minister for August Pinochet, one time military dictator of Chile. And in August of 1997, he received an invitation to meet with the Governor of Texas. What did they discuss? The privatization of Social Security. Imagine that!
It has been over 20 years since Piñera left the Chilean government and since that time he has become a globe trotting advocate for privatization. What most don’t know about the Chilean pension system is chilling to read…(And so is the story of his role with the Chilean dictatorship)
The Chilean system was begun in 1981, 24 years ago. It was initially funded by slashing government programs, selling off of government assets, selling bonds and raising taxes. Those costs continued of course and averaged more than 6% of Chile’s GDP all through the 80’s and are expected to average more than 4% of GDP through 2037.
The news from Chile today? It is forecast that as many as half of Chile’s workers won’t be able to save enough to receive the minimum pension when they retire. Right now, 17 percent continue to work past retirement because they can’t afford to and 7% are looking for work after retirement.
Just a note of interest…The World Bank, which is usually enthusiastic about privatization, found that fees and other costs ate up about 15% of the contributions made by the workers. They have suggested that Chile should subsidize the private system to “increase its role in preventing old-age poverty.”
Ya just gotta love those Republicans!
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