Observation (CEACR) - adopted 1995, published 82nd ILC session (1995)

Old-Age Insurance (Industry, etc.) Convention, 1933 (No. 35) - Chile (Ratification: 1935)

1. The Committee notes the information provided by the Government in its report as well as the discussion on the application of the Convention which took place in the Conference Committee in June 1993. On that occasion the Government's representative stated in particular that Convention No. 35 recognizes and regulates a former model of social security. He added that, though Convention No. 35 had not been applied in Chile since 1980, it was the will of the Government to maintain a constructive dialogue, and to supply in its future reports further information which would permit a legal analysis and proper interpretation of the standards in question by the Committee. In this connection and with reference to the comments it has been making for several years, the Committee is bound to observe that, according to the information in the Government's report, since the "new pension system" was introduced in 1980 by Legislative Decree No. 3500, as amended, the following important provisions of the Convention are still not being applied:

Article 9, paragraph 1, of the Convention (employers' contribution to the financial resources of the insurance scheme). According to the Government's explanation in its report, under sections 17, 18 and 21 of Legislative Decree No. 3500 of 1980, each worker constitutes his own pension fund with the compulsory contribution deducted monthly from his wages. As concerns the employers' contributions, on which the employers and workers may agree upon individually or collectively, in the opinion of the Government, they acquire the character of compulsory contributions in terms of contract law. In this respect, the Committee reiterates that, in the new pension scheme, the employers' contribution is no more than a possible supplementary contribution upon which the worker may agree with his employer without there being any legal obligation on the employer to bear the cost. The Committee must therefore once again express the hope that the Government will take the necessary measures to give effect to the recommendations, approved by the Governing Body, of the Committee set up to examine the representation submitted under article 24 of the Constitution of the ILO alleging non-observance by Chile of, inter alia, Convention No. 35 (see document GB.234/23/28, 234th Session, 17-21 November 1986).

Article 9, paragraph 4 (contribution of the public authorities to the financial resources or benefits of the insurance scheme). The report repeats the information provided previously on state guarantees (sections 73 et seq. of Legislative Decree No. 3500) and indicates that in 1994 the State's monthly contribution in respect of such guarantees was approximately 256 million pesos (US$600,000). According to the Government, the State's contribution cannot be regarded as conditional or exceptional; it is real and concrete, and is a specific amount which can be evaluated. The Committee notes this information. It reminds the Government that the above-mentioned Committee of the Governing Body concluded that this participation "does not strictly correspond to the contribution to the financial resources or benefits of insurance schemes" prescribed by the Convention. The Committee therefore cannot but reiterate the hope that the necessary measures will be adopted to ensure that full effect is given to this provision of the Convention.

Article 10, paragraphs 1 and 2 (administration of the insurance scheme). The Committee notes the relevant provisions of Act No. 19069 of 1991, the substance of which is reproduced in section 220 of the Labour Code (in the consolidated version of January 1994), under which the main purposes of trade unions include establishing, assisting in the establishment of, or associating with, institutions involved in the provision of pension or health insurance, whatever their legal status, and participating in them. The Government's report provides information on "Pension Fund Administration (AFP)" whose establishment has involved participation by unions or organizations of workers and associations of employers. The Government reiterates that private administration on a profit basis of the new pension system has encouraged competition between the AFPs and attracted new insured persons by better service, a better return on investment of the fund's resources and lower costs to the insured, reflected in lower commissions. While noting this information, the Committee wishes once again to draw the Government's attention to the above recommendations approved by the Governing Body to the effect that the Government should adopt appropriate measures to amend Legislative Decree No. 3500 so that the pension insurance scheme is administered by non-profit-making institutions.

Article 10, paragraph 4 (participation of insured persons in the administration of insurance institutions). The Government states in its report that Legislative Decree No. 3500 does not establish any compulsory mechanism whereby persons insured by an AFP participate in the administration and direct management of the fund, except in the case of those founded by workers or their associations. However, it does not prohibit such participation. The Committee is bound to reiterate the hope that the Government will give effect to the above-mentioned recommendations approved by the Governing Body and adopt the necessary measures to ensure that the representatives of insured persons participate in the administration of all insurance institutions under conditions to be determined by national laws or regulations, in accordance with the provisions of the Convention.

2. In view of the fact that the Committee has been asking the Government for many years to take the necessary steps to change the pension scheme regulated by Legislative Decree No. 3500 of 1980, the Committee suggests - as did the Conference Committee - that the Government consider the possibility of requesting ILO technical assistance in seeking a means of bringing national legislation and practice into full conformity with the Convention.

[The Committee is asked to report in detail in 1996.]