Observation (CEACR) - adopted 2007, published 97th ILC session (2008)

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

I. 1. The Committee notes the conclusions and recommendations of the committee set up to examine the representation made by the College of Teachers of Chile AG under article 24 of the Constitution alleging non-observance by Chile of, inter alia, Convention No. 35 (GB.298/15/6, 298th Session, March 2007).

In its conclusions (paragraphs 45 to 53 of the report), the above committee noted the measures adopted by the Government to resolve the problem of the social security arrears, which was the subject of the representation, arising from the non-payment of the further training allowance by municipal employers to the teachers entitled to it. With regard to the over 140 municipalities that had failed to pay the further training allowance or to sign agreements on the subject, the committee set up to examine the representation noted the information provided by the Government on the measures adopted, including legislative measures, with the main intention of authorizing advance payments from the Common Municipal Fund in order to facilitate a solution to the problem affecting a number of municipalities that were still in arrears with the payment of further training allowances for teachers in the education services covered by Legislative Decree No. 1 of 1996 on the Teachers’ Statute, issued by the Ministry of Education. In relation to the agreements signed to resolve the problem of arrears, the Committee set up to examine the representation noted with interest the Protocol Agreement adopted by the complainant organization and the Government in December 2003 to: “… evaluate the current system of further training with a view to revising the current further training allowance as from 2006”. The committee set up to examine the representation considered that, in the event of non-compliance, the Ministry of Education should institute administrative proceedings and apply the penalties prescribed by law. It also trusted that the Government would provide it with detailed information on the manner in which supervision is carried out in practice, as well as the penalties that may have been applied to municipalities that have failed to pay the further training allowance and, in that case, on the measures taken to compensate the damages caused.

Finally, in its conclusions, the committee set up to examine the representation considered that the Committee of Experts should continue to follow up the matters raised in its report. The Committee of Experts notes the above and endorses the conclusions of the committee set up to examine the representation. The Committee of Experts hopes that the Government will give effect to the recommendations made by the committee set up to examine the representation, and it urges the Government to: (a) take all the necessary measures to solve the problem of the social security arrears arising from non-payment of the further training allowance; (b) continue and strengthen the supervision of the actual payment of the further training allowance by employers in arrears; and (c) ensure the effective application of deterrent sanctions in the event of the non-payment of the further training allowance.

The Committee of Experts invites the Government to submit a report under article 22 of the ILO Constitution on the application of Conventions Nos 35 and 37 containing detailed information on all the measures adopted or envisaged to secure the effective payment of subsidies, including the further training allowance, by all the municipalities, and on the manner in which the situation has evolved as a result of these measures, indicating in particular: (a) the number of inspections carried out, in particular by the Ministry of Education, to verify payment of the further training allowance by the municipalities; the number and nature of the violations reported and the number and nature of the penalties imposed; (b) the number of municipalities remaining in arrears with regard to the payment of the further training allowance; (c) the amount of such arrears and the number of workers affected; (d) the amount of arrears settled; (e) the outcome of the legislative procedure concerning the bill aimed at resolving the problem of social security arrears and, once the bill has been adopted; (f) information on its implementation, including the number of municipalities requesting advances to enable them to pay the further training allowance; and (g) any agreement concluded with the aim of solving the problem of arrears.

2. The Committee also notes the communication dated 18 July 2007, also made by the College of Teachers of Chile A.G., referring, in the same way as the above representation, to the problem of social security arrears arising from the non-payment of the further training allowance by municipal employers to teachers. This communication was forwarded to the Government on 5 September 2007.

II. 1. With reference to its previous comments, the Committee notes the Government’s indication that the legislation governing the pension system based on individual capital accumulation has not been amended in a manner which affects the application of the Convention. The system of pensions based on capital accumulation does not make distinctions between contributors on the basis of the type of work performed in the case of industrial or agricultural work. The only workers who are covered by special provisions in relation to the amount of the contribution, its financing and pensionable ages, are those engaged in types of work classified as arduous. The requirements for entitlement to a pension, the manner of the calculation of pensions and the conditions for entitlement to the minimum benefits guaranteed by the State are the same for all workers, with the exception of those engaged in arduous types of work, who may retire at an earlier age than other workers, and who receive in their individual capital accounts, in addition to their own contributions, an additional employers’ contribution.

2. In its previous comments, the Committee noted the conclusions and recommendations of the committee set up to examine the representation made by a number of Chilean unions of employees of Pension Fund Administrators (AFPs), under article 24 of the Constitution, alleging non-observance by Chile, inter alia, of Convention No. 35 (GB.277/17/5, 277th Session, March 2000). In accordance with the conclusions contained in paragraphs 18 to 35 of the report and its previous comments, the Committee of Experts reiterated the need to adopt the measures required to ensure that:

(i) The pension system established in 1980 by Legislative Decree No. 3500 is administered by non-profit-making institutions in accordance with the provisions of Conventions Nos 35 and 36 (Article 10, paragraph 1) and Conventions Nos 37 and 38 (Article 11, paragraph 1), unless the administration is entrusted to institutions founded at the initiative of the parties concerned or of their organizations and duly approved by the public authorities, in accordance with Conventions Nos 35 and 36 (Article 10, paragraph 2) and Conventions Nos 37 and 38 (Article 11, paragraph 2).

In this respect, the Government indicates that the pensions system governed by Legislative Decree No. 3500 of 1980 is a system designed on the basis of the administration of resources by private entities. The system was designed on the basis that a commission is paid by insured persons to the above entities in exchange for the administration of their funds. In this manner, entrusting the administration of insurance funds to non-profit-making entities would be similar to a pay-as-you-go system in which public entities administer the insurance funds of contributors, but is incompatible with a system of individual capital accumulation. The Committee notes this statement. In this respect, the Committee wishes to emphasize that, irrespective of the financing technique, whether collective or individual, the systems of capitalization that are in operation in highly socially developed countries show that this incompatibility does not exist and that the funds may be managed efficiently both by public and private institutions, without them necessarily being profit-making. Reference should be made, by way of illustration, to the fact that in Chile, in the field of employment injury, many mutual benefit associations are in operation which, without being profit-making, achieve their objectives in full coordination and complementarity with the rest of the Chilean social insurance system.

(ii) Representatives of the insured persons participate in the administration of the system under conditions determined by national laws and regulations, in conformity with the provisions of Conventions Nos 35 and 36 (Article 10, paragraph 4) and Conventions Nos 37 and 38 (Article 11, paragraph 4).

In relation to this point, the Government indicates that the arguments outlined with regard to the previous point are still valid as it is necessary for the funds to be managed by entities with professional staff dedicated to that purpose. The participation of insured persons is guaranteed, in the view of the Government, by the possibility of choosing the type of fund in which compulsory and voluntary contributions are to be deposited and by choosing the AFP which will manage the funds of insured persons. The Committee notes this statement. However, it wishes to emphasize that other countries in which systems of individual capital accumulation have also been adopted have systems of administration in which the participation of insured persons is guaranteed and which operate with a high level of specialization and efficiency. It therefore hopes that the Government will take the necessary measures, in conformity with the Convention, to give effect to the decisions of the Governing Body.

(iii) The competent services carry out and strengthen their oversight of employers and impose effective sanctions to discourage recurrences of cases of failure to pay pension contributions.

On this point, the Government indicates that Chile has strengthened the guarantees of the social insurance rights of workers through the adoption of Acts Nos 20022 and 20023, which established new tribunals covering the collection of labour and social insurance contributions, and introduced new provisions respecting the collection through the courts of social insurance contributions. This legislation has strengthened the powers of the authorities and the means of supervising employers to ensure the payment of social insurance contributions for their workers. The Committee notes the Government’s statement with interest. It requests the Government to provide information, including statistical data, on the activities of the new tribunals for the collection of labour and social insurance contributions, with an indication of the number of penalties imposed and the texts of the rulings issued by the above tribunals.

III. With regard to the other matters raised in its previous comments, the Committee observes that the Government has not provided information on the matters of principle. This being the case, the Committee hopes that the Government will adopt the necessary measures to ensure, in accordance with Article 9, paragraph 1, of the Convention, that employers contribute to the resources of the insurance scheme and, in accordance with Article 9, paragraph 4, that the public authorities contribute to the resources or to the benefits of the insurance scheme.

IV. In its previous comments, the Committee noted the information submitted by: the Directorate of the National Association of Academics of the University of Chile (A.G.); the Directorate of Act 19170 on the State Railway Company; the President of the National Association of Employees of the Directorate of Libraries, Archives and Museums (DIBAN); the Association of Professional and Technical Staff of the University of Chile (APROTEC); the Association of Public Health Employees, Western Region; the Directorate of the Federation of Associations of Employees of the University of Chile (FENAFUCH); and the Association of Public Employees for Redress for Pension-related Prejudice. In their observations, the above organizations allege that public employees who joined the individual capital accumulation pension system established by the Legislative Decree of 13 November 1980 have seen the amount of their pensions drop to one third of their real income or, at best, to under one half, upon retirement. This has given rise to a situation of inequality, since two workers of the same age with the same number of years’ service and the same monthly benefits or income may be treated differently on retirement, with one receiving a pension amounting to one third of that of the other, merely because they belong to different pension schemes. According to the above organizations, as a result, some of the pensions already paid by the AFPs are lower than the minimum monthly wage. The Committee noted these observations and recalled that, in accordance with Article 19 of the Convention, the rate of the pension shall be an amount which, together with any means of the claimant in excess of the means exempted, is at least sufficient to cover the essential needs of the pensioner.

The Government indicates in this respect that those workers who joined the pension system based on individual capital accumulation and who had previously been covered by one of the funds of the former pension system are ensured a minimum old-age pension at the age of 65 years or above for men and at the age of 60 years or above for women when they have completed at least 20 years of contribution or attributable service in any of the social insurance systems in accordance with the provisions governing the corresponding scheme. Consequently, the transfer of workers covered by the pay-as-you-go to the system of individual capital accumulation does not involve the loss of the periods of contribution in respect of the years of service for the public system, which will still be acknowledged in the form of an acknowledgement voucher for the purpose of their pension benefits under the capital accumulation system, or so that they are granted entitlement to a minimum pension if their insurance funds are not sufficient to finance one.

The Government adds that under the terms of the agreement concluded with the National Association of Public Employees (ANEF), a Bill (Boletín No. 3975-13) is being examined by the National Congress which establishes a premium of 50,000 pesos a month for workers in the public sector who are covered by an AFP who, when retiring, receive a pension that is significantly lower than the income they received previously. Furthermore, on 7 June 2007, the President of the Republic sent a Bill (Boletín No. 5173-05) to the National Congress which, inter alia, establishes a labour retirement premium for personnel covered by the private pension system and who contribute to the system in respect of their employment in the public service and have complied with the other requirements established in this respect.

The Committee notes with interest the compensatory measures adopted by the Government in respect of those public sector employees who were transferred to the individual capital accumulation insurance system established under the Legislative Decree of 13 November 1980 and who have seen the amount of their pensions reduced when taking retirement. As the above measures apply only to the public sector, the Committee hopes that the Government will examine the possibility of extending similar measures to all other insured persons.

[The Government is asked to reply in detail to the present comments in 2008.]