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.

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“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%.

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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.

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“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.

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International

Two killed in shooting at restaurant near Frankfurt Airport

Two people were shot dead early Tuesday at a restaurant in Raunheim, near Frankfurt Airport, according to local police.

Preliminary findings indicate that an armed individual entered the establishment at around 03:45 local time (02:45 GMT) and opened fire on the victims, who died at the scene from their injuries.

The suspect fled and remains at large, while the motive behind the shooting is still unclear, German media reported. Authorities have launched a large-scale search operation.

International

U.S. counterterrorism chief resigns over opposition to war in Iran

Joe Kent, director of the National Counterterrorism Center, announced Tuesday that he has resigned from his post, citing his opposition to the ongoing war in Iran.

In a post on X, Kent said he could not, “in good conscience,” support the conflict, arguing that Iran did not pose an imminent threat to the United States. He also claimed that the war was driven by pressure from Israel and its lobbying influence in Washington.

In a resignation letter addressed to Donald Trump, Kent alleged that at the start of the current administration, senior Israeli officials and influential figures in U.S. media carried out a disinformation campaign that undermined the “America First” platform and fostered pro-war sentiment aimed at triggering a conflict with Iran.

Kent further stated that he could not support sending a new generation of Americans to “fight and die in a war that provides no benefit to the American people and does not justify the cost in American lives.”

Since the United States and Israel launched attacks against Iran on February 28, at least 13 U.S. service members have been killed, while 10 others have been seriously wounded and around 200 have sustained minor injuries, according to a report published by The Wall Street Journal.

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International

German president warns Iran war could spread and disrupt Strait of Hormuz

The president of Germany, Frank-Walter Steinmeier, warned Monday that the war involving Iran could expand and further disrupt shipping through the strategic Strait of Hormuz. He urged a swift end to hostilities between Iran, United States and Israel.

Speaking in Panama City during a joint appearance with Panamanian President José Raúl Mulino, Steinmeier said available information suggests Iran has significant capacity to disrupt maritime traffic through the key oil route.

“Iran has considerable potential to interfere with shipping through the Strait of Hormuz,” Steinmeier said through an interpreter. “We should therefore reach an end to the hostilities as soon as possible and call on all parties involved to make that happen.”

The remarks came during Steinmeier’s visit to Panama, the first by a German president to the Central American nation.

The German leader described the possibility of the conflict spreading as “very dangerous,” saying recent developments indicate that such a scenario cannot be ruled out.

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Over the weekend, U.S. President Donald Trump urged allied nations to help ensure safe passage for ships through the Strait of Hormuz after Iran moved to block the waterway in response to U.S. strikes. However, several allies—particularly in Europe—have shown little support for the proposal.

“Some are very enthusiastic, others are not, and some are countries we have helped for many years,” Trump told reporters at the White House. “We have protected them from terrible external threats, and they’re not that enthusiastic. And the level of enthusiasm is important to me.”

Meanwhile, Kaja Kallas, the European Union’s top diplomat, said the Strait of Hormuz falls “outside NATO’s scope” and stressed that “the war involving Iran is not Europe’s war.”