International
Higher contributions and social security: the keys to Chile’s new pension reform
The Chilean Parliament gave the green light this Wednesday by a large majority to a pension reform promoted by the Government of Gabriel Boric that seeks to improve low pensions and proposes the most significant changes to the model created more than four decades ago by the dictatorship.
“It’s a tremendous achievement for Chile. It is an act of justice, of deep affection and respect for our people, which responds to what is one of the biggest debts that our country drags,” the president said in a public statement from the La Moneda palace.
Here are the keys to a reform that for some is “decaffeinated” and for others is an “achiemement” of a very polarized political class, which has not agreed for years on the great structural changes that Chile requires:
Established in 1981, in the middle of the dictatorship of Augusto Pinochet (1973-1990), the Chilean system was a pioneer in the region in installing individual capitalization and forcing each formal worker to contribute 10% of his monthly salary to a personal account that he can dispose of when he retires, managed by the controversial private pension administrators (AFP).
Its defenders argue that the model has contributed to the development of the national capital market, while its detractors consider that it is an abusive and unfair system and that it only works if you have a stable job and a high income, something unthinkable for the vast majority of Chileans.
“This system has not worked because of the way pensions are calculated. People who contributed between 35 and 40 years and retired in 2023 had a replacement rate of 32.6%, this is a third of their average 10-year salary,” María José Azócar, of the Sol Foundation, told EFE.
Pensions have been leading the polls on major citizen concerns for years and citizens had lost confidence in the ability of politics to improve them.
The refoundation of the system was also one of the main demands of the 2019 protests.
None of the reforms proposed by the Governments of Michelle Bachelet and Sebastián Piñera came to the surface and only partial achievements were obtained such as the creation of a public pension for the most vulnerable in 2008 and its expansion in 2022.
The reform, which has undergone substantial modifications since it was presented by the left-wing Administration in 2022, seeks to benefit 2.8 million retirees, with increases in their pensions of between 14% and 35%.
It also increases the universal basic pension to 250,000 ($253); gradually raises the contribution to 17%, at the expense of the employer; creates social insurance; incorporates intra- and intergenerational solidarity mechanisms and tightens industry regulation to make it more competitive.
“It is a reform that changes the face of what the dictatorship did to this country,” said the Minister of Labor and Social Security, Jeannette Jara, after the approval.
The economist of the University of Chile Guillermo Larraín explained to EFE that “the most advanced countries have mixed systems, but these are more dominated by the State, while in Chile the path has been the other way around, because it is moving from a very private system to a slightly more public one.”
It was negotiated with the traditional right-wing coalition Chile Vamos and, although it is far from what the Government aspired to, it is a breath of air for Boric, since it was one of his great campaign promises, along with the tax pact that he still does not manage to move forward.
The most radical part of the coalition that makes up the Government (Communist Party and Broad Front) voted in favor, despite believing that too many concessions were made during the parliamentary debate and that they gave up eliminating the AFPs and creating a system with greater state weight.
“This reform is valid and perfects the system of the AFPs. In the long term, 6 more points will go to individual capitalization, when in the original Government project those 6 points went to social insurance so that Chile could catch up on the international stage and not continue to be an extreme case,” said Azócar.
Skepticism also reigns in the street: according to the latest Data Influye survey, 64% of those over 55 believe that the reform will not “definitely” solve the problem of pensions, compared to 33% who believe that it will only solve it “in part” and 1% who are very satisfied.
The only ones who voted against were some of them from Chile Vamos and the deputies of the different far-right parties in Parliament, opposed to any distribution system.
The leader of the far-right Republican Party, José Antonio Kast, who lost to Boric in the 2021 elections, charged against the reform in X for “taking away from workers one of their most precious assets, the right to property over their savings” and warned that he will repeal it if he manages to come to power in the elections at the end of the year.
International
Colombian president Gustavo Petro warns against U.S. military intervention in Venezuela
Colombian President Gustavo Petro defended his Venezuelan counterpart Nicolás Maduro after the U.S. administration labeled him as the leader of the “Cartel of the Suns” and authorized the Pentagon to use military force against drug cartels, which could lead to an intervention on Venezuelan soil to combat these criminal groups. Petro stated that any military operation without the approval of Colombia or Venezuela would represent an “aggression.”
Petro responded over the weekend following reports on Friday from U.S. media about President Donald Trump’s order to confront designated global terrorist organizations such as the Cartel of the Suns, the Sinaloa Cartel, and the Tren de Aragua, including operations on foreign soil. Furthermore, the U.S. State Department increased the reward for information leading to Maduro’s capture from $25 million to $50 million.
“I publicly convey my order given as commander of the Colombian armed forces. Colombia and Venezuela are one people, one flag, one history. Any military operation without the approval of the brother countries is an aggression against Latin America and the Caribbean. It is fundamentally contradictory to our principle of freedom. ‘Freedom or death,’ Bolívar shouted, and the people revolted,” Petro posted on his social media, clearly expressing his disagreement with potential U.S. military intervention in Venezuela.
U.S. Secretary of State Marco Rubio said in an interview on The World Over program on Friday that controlling these terrorist groups is decisive. He added that, for the U.S., these gangs are no longer just local street gangs but well-organized criminal enterprises spreading from Mexico, Guatemala, and Ecuador.
“We cannot continue treating these guys as local street gangs. They have weapons like terrorists, in some cases they have armies. They control territories in many cases. These cartels extend from Maduro’s regime in Venezuela, which is not a legitimate government,” Rubio told the audience.
International
U.S. offers $5 million reward for arrest of haitian gang leader Jimmy “Barbeque” Cherizier
The United States announced on Tuesday a $5 million reward for the arrest of Haitian gang leader Jimmy “Barbeque” Cherizier, accused of violating U.S. sanctions. Haiti, the poorest country in Latin America and the Caribbean, is engulfed in a political crisis and a wave of armed gang violence, which an international security mission led by Kenya is trying to end.
Cherizier, 48, and Bazile Richardson have been formally charged with attempting to transfer funds from the United States to Haiti to finance gang activities, the Department of Justice reported.
“There is a good reason to offer a $5 million reward for information leading to Cherizier’s arrest,” said federal prosecutor Jeanine Pirro at a press conference.
“He is a gang leader responsible for atrocious human rights violations, including violence against U.S. citizens in Haiti,” she added.
Cherizier has been subject to U.S. Treasury sanctions since 2020 and UN sanctions since 2022.
International
Mexican President Claudia Sheinbaum to meet Guatemalan leader Bernardo Arévalo next friday
Mexican President Claudia Sheinbaum confirmed on Monday that she will hold her first bilateral meeting with her Guatemalan counterpart, Bernardo Arévalo, next Friday.
During her press conference at the National Palace, Sheinbaum detailed that the August 15 meeting will include a brief visit to Guatemala, followed by a trilateral meeting with Belize’s Prime Minister, Juan Antonio Briceño, in Calakmul, Campeche, in southeastern Mexico.
Sheinbaum explained that the meeting was proposed by Arévalo during a phone call last Friday, in which the Guatemalan president invited her to visit Guatemala.
The agenda will begin on Thursday night when Sheinbaum travels to Chetumal to lead her morning press conference on Friday.
Afterwards, she will travel to Guatemala for the bilateral meeting with Arévalo, then return to Calakmul to meet Belize’s Prime Minister Briceño for a trilateral meeting with Arévalo.
Later, Sheinbaum will hold a bilateral meeting with the Belizean leader.
The president announced that many agreements will be announced during the meetings with the southern border countries but avoided providing details to keep them as a surprise for that day.
Colombian president Gustavo Petro warns against U.S. military intervention in Venezuela
U.S. offers $5 million reward for arrest of haitian gang leader Jimmy “Barbeque” Cherizier
Honduras condemns U.S. reward against Nicolás Maduro as baseless attacks
Tec de Monterrey honors one of its students for his contribution to nanotechnology in medicine
Defense Minister commends salvadoran soldier for Central American Cross Country victory
Extension of the state of emergency approved in southern Chile
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