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
Iranian leader warns foreign powers have “no place” in Strait of Hormuz
Iran’s Supreme Leader, Mojtaba Khamenei, said Thursday that the Persian Gulf is entering a new era marked by a “bright” future without the presence of the United States in the region.
His remarks came during the commemoration of Persian Gulf Day, amid ongoing regional tensions following recent military confrontations involving Iran, the United States, and Israel.
“Today, two months after the largest military buildup and aggression by the bullies of the world in the region and the humiliating defeat of the United States, a new chapter is being written for the Persian Gulf and the Strait of Hormuz,” Khamenei stated.
The Iranian leader insisted that the future of the region would be free from American influence and focused instead on the internal development and prosperity of Gulf nations.
“By the power and strength of God, the bright future of the Persian Gulf region will be a future without the United States and dedicated to the progress, welfare, and prosperity of its nations,” he said.
Khamenei also questioned the effectiveness of U.S. military bases in the region, arguing that they do not provide security even for Washington’s allies.
“Foreigners who come from thousands of miles away and commit evil and malicious acts have no place there except at the bottom of its waters,” he declared.
In addition, the Iranian leader defended new measures being prepared by Tehran to regulate maritime traffic through the Strait of Hormuz, including fees for vessels passing through the strategic waterway. According to Khamenei, the policies would generate economic benefits and greater stability for the region.
Regional tensions remain high following the conflict that erupted on February 28 between the United States and Israel against Iran, leading to strategic blockades in the Strait of Hormuz, a route through which nearly 20% of the world’s oil supply previously passed. The situation has disrupted maritime trade and contributed to rising global oil prices.
Central America
U.S. and Regional Allies Back Panama Amid Dispute With China
The United States, Bolivia, Costa Rica, Guyana, Paraguay and Trinidad and Tobago issued a joint statement in support of Panama’s sovereignty, arguing that China’s recent actions represent an attempt to politicize maritime trade and undermine the sovereignty of nations in the hemisphere.
“We are closely monitoring China’s selective economic pressure and recent actions affecting vessels flying the Panamanian flag,” the statement released Tuesday said. “Panama is a pillar of our maritime trading system and, as such, must remain free from undue external pressure.”
The statement comes amid growing tensions surrounding the Panama Canal and the operation of key ports linked to global trade.
At the end of January, Panama’s Supreme Court invalidated the legal framework supporting the 1997 concession that granted Panama Ports Company, a subsidiary of CK Hutchison, the right to operate the Balboa and Cristóbal terminals located on the Pacific and Atlantic entrances of the Panama Canal.
The ruling followed mounting pressure from the United States to curb Chinese influence around the strategic waterway, through which roughly 5% of global maritime trade passes.
CK Hutchison, which managed the ports for nearly three decades, rejected the court’s decision and accused Panamanian authorities of illegally confiscating its assets. The company has launched international arbitration proceedings against Panama, seeking more than $2 billion in damages.
Following the court ruling, reports emerged of increased detentions and inspections of Panamanian-flagged vessels in China, actions widely viewed as retaliatory measures.
On Wednesday, China’s Foreign Ministry dismissed the joint statement as “completely unfounded and misleading,” accusing the United States of politicizing port operations and warning that Beijing would take steps to protect its interests in Panama.
International
King Charles III Says U.S.-UK Alliance Is “Irreplaceable and Unbreakable”
King Charles III of the United Kingdom reaffirmed the strength of the British-American relationship on Tuesday during a speech before the United States Congress, describing the alliance between the two nations as “irreplaceable and unbreakable.”
The address, delivered at the Capitol, marked the first speech by a British monarch before Congress since Queen Elizabeth II in 1991 and comes at a time of political tensions between Donald Trump’s administration and the Labour government of Prime Minister Keir Starmer.
“As President Trump himself observed during his state visit to Britain last autumn, the bond of kinship and identity between the United States and the United Kingdom is invaluable and eternal. It is irreplaceable and unbreakable,” the king said.
While reflecting on the upcoming 250th anniversary of U.S. independence, which will be commemorated this year, Charles III stated that the partnership between the two countries “was born out of disagreement, but is no less strong because of it.”
The monarch emphasized the democratic values shared by both nations and noted that major global changes have occurred whenever the two allies found common ground.
“When we have found that way to agree, great changes have taken place not only for the benefit of our peoples, but for all peoples,” he said.
King Charles also quoted British Prime Minister Keir Starmer, who recently described the relationship as “an indispensable alliance.”
Concluding his speech, the monarch described the shared history of the United States and the United Kingdom as “a story of reconciliation, renewal, and an extraordinary partnership.”
He added that Washington and London have forged “one of the most consequential alliances in human history.”
“I pray with all my heart that our alliance continues to defend our shared values, together with our partners in Europe, the Commonwealth, and around the world, and that we ignore calls urging us to become increasingly isolationist,” Charles III stated.
The king ended by urging both nations to “recommit to one another in selfless service to our peoples and to all peoples of the world.”
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