Invalidity Insurance (Industry, etc.) Convention, 1933 (No. 37) - Chile (Ratification: 1935)

Individual Case (CAS) - Discussion: 1987, Publication: 73rd ILC session (1987)

See under Convention No. 35, as follows:

The Government has communicated the following information:

The Government has carefully and thoroughly analysed the observations made by the Committee of Experts on this Convention and on Conventions Nos. 36, 37 and 38. The outcome of this was the adoption of a series of measures, the details of which are given below.

The legislation in force in Chile envisages the participation of the public authorities in providing resources and insurance benefits. It had been established that if the accumulated resources did not cover the financing of the minimum pension, this has had to be ensured by the State. The legislation in force also provides that before an administration of pension funds was declared bankrupt, the State had to cover all the present and future obligations of the bankrupt body.

As for the measures adopted or envisaged to amend Legislative Decree No. 3-500 with the aim of having pensions administrated by non-profit bodies, as required by the Convention, except in some cases where the state administration entrusted institutions set up at the initiative of the persons concerned or groups of them, being duly recognised by the public authorities the Government notes that the Pension Fund Administration (called AFP PROTECTION) was set up in 1986. It was formed with capital contributions from workers affiliated to the Trade Union of the State Bank of Chile, one of the largest trade union organisations in the country.

In this way the AFP has assumed a trade union character. This is also the case for the group of copper mine supervisors (called CUPRUM) and for the body set up by workers in the education sector (called MAGISTER). With a view to the continued expansion of this method, the Labour Directorate is studying how to help trade union organisations in setting up Pension Fund Administrations. Furthermore, the Executive has prepared for legislative action a draft Act lowering the minimum capital necessary for the setting up of an AFP. In this way a larger number of such institutions could be set up, having a very special character, which would be the easiest for that particular sector of workers to set up. All of these methods are aimed precisely at having the workers themselves as the managers of these institutions.

In addition, it should be pointed out that measures have been adopted which objectively promote the creation of Pension Fund Administrations by workers with the natural consequence of ensuring their participation in the administration of them. If today's trend continues over time, there will be even more participation by the insured persons in their administrations.

Lastly, it should be pointed out that during 1986 the process of people's participation in the shareholding of the two biggest Pension Fund Administrations (AFP PROVIDA and AFP SANTAMARIA) came to an end.

This system had operated through credit and tax concessions aimed at all the workers of the country, so that the ownership of these institutions had been able to be widely dispersed. After this process, in the first months of the year it was agreed that the shareholders' councils of these AFPs would remain represented on the executive bodies of the new owners.

It must also be stressed that the Government has shown a clear desire to collaborate with the supervisory bodies of the ILO, for example, by introducing legislative amendments in line with the Committee of Experts' comments and which have been presented to all the supervisory bodies, including exceptional ones such as the Committee set up under article 24 of the ILO Constitution to examine the representations presented against Chile in 1984 and 1985. On all these occasions the Government has supplied full information, prepared in a timely and thorough manner.

In addition, a Government representative, the Deputy Minister of Labour, indicated that, after carefully analysing the observations made by the Committee of Experts, his Government had adopted a series of measures designed to give effect to the Conventions concerned.

In the first place, his country's legislation provided for the public authorities to contribute to the financial resources or benefits of insurance schemes by stipulating that, if the accumulated funds were not sufficient to finance a minimum pension, the State should make good the shortfall. The legislation also provided that, in the event of the bankruptcy of an institution administering a pension fund, the State should make good all present and future obligations of the bankrupt institution.

With regard to the measures adopted or envisaged for the amendment of Decree Law No. 3500 to ensure that pension funds were administered by non-profit-making institutions except in cases where their administration was entrusted to institutions founded on the initiative of the parties concerned or their organisations and duly approved by the public authorities, he informed the Committee of the establishment of an institution administering a "PROTECCION", which would complement institutions of a general nature. In that connection, the Directorate of Labour was studying how to help trade unions establish other institutions to administer pension funds. Also, to help workers set up such institutions without difficulty. the Executive Branch had put forward a Bill under which the minimum capital required for their establishment would be reduced. The purpose of all those measures was to encourage workers themselves to manage these pension fund institutions.

The Workers' members said that they had the impression that the Government was convinced of the need to adopt up-to-date legislation and practices in respect of the Conventions in question. The conclusions and recommendations formulated by the Committee set up by the Governing Body had clearly indicated the measures that should be adopted. It would be desirable if a new pension system were to replace the previous one. Under the Conventions under consideration, the institutions responsible for managing pension funds should not be profit making, except in cases where their administration was entrusted to institutions founded on the initiative of the parties concerned and duly approved by the public authorities. In that connection, the Government representative had stated that the establishment of various institutions administering pension funds in the form of limited liability companies under private law, and this was contrary to the Conventions. He had also indicated that measures had been adopted to secure workers' participation in the management of pension funds. It was therefore to be hoped that the Government would give effect to the conclusions and recommendations of the committee set up by the Governing Body, as well as to the comments formulated by the Committee of Experts.

The Employers' members expressed their agreement with the statement made by the Workers' members. Four basic questions emerged from the comments made by the Committee of Experts and from the conclusions and recommendations made by the committee set up by the Governing Body. They were: (1) the employers' contribution to the financial resources of compulsory insurance schemes, (2) the contributions of the public authorities to the financial resources or benefits of pension funds, (3) the management of pension insurance by institutions which were not profit making and (4) the participation of insured persons in the management of insurance institutions. The Committee of Experts had requested wholly pertinent information from the Government in respect of all those points. Consequently, the Government should be invited to reply to the questions posed by the Committee of Experts, which the Government would doubtless do.

The Government representative said that the new pension system would replace the previous one. The latter continued to exist solely in the case of insured persons whose interests would otherwise be adversely affected by a transfer to the new system. No worker entering the labour market could now join the old system, which existed solely for those workers who, because they had enjoyed special conditions or had contributed over many years, could not transfer their funds to the new system. With regard to the management of insurance funds by profit-making institutions, he referred to the conclusions and recommendations made by the committee set up by the Governing Body. In that connection, a series of measures had been taken to facilitate the management of insurance funds by the parties concerned. So far as the private nature of their management was concerned, he emphasised the guarantee provided by the State. His Government had taken note of the observations made by the Committee set up by the Governing Body and by the Committee of Experts and would supply the detailed information that had been requested.

The Committee took note of the information supplied by the Government representative with regard to the application of Conventions Nos. 35, 36, 37 and 38. In its comments, the Committee of Experts had taken up the conclusions and recommendations of the Committee set up by the Governing Body to examine the representation submitted under article 24 of the Constitution. Those conclusions pointed to divergencies with the Conventions with regard to various important aspects. Consequently, the present Committee hoped that the Government would take the necessary measures to ensure that the respective Conventions were fully implemented and that it would be able to report on the progress made in that connection.

Observation (CEACR) - adopted 2016, published 106th ILC session (2017)

Follow-up to the recommendations of the tripartite committees set up to examine the representations made in 1986 and 2000 by the National Trade Union Coordinating Council of Chile and a number of national trade unions of workers of private sector pension funds (AFPs)

With reference to the recommendations of the tripartite committees, the Government recalls that various proposals to modify the pensions system are currently under consideration. It should be noted that the Presidential Advisory Commission on the Pensions System has examined three proposals for overall solutions. In total, no fewer than 58 proposals have been approved and grouped on the basis of their objectives. With regard to the recommendation to ensure that the privately administered pensions system created by Legislative Decree No. 3500 of 1980 is administered by non-profit-making institutions, one of the proposals supported by 11 of the 24 members of the Advisory Commission is to transform the current solidarity scheme into a social insurance scheme to become the centrepiece of a possible new retirement system with tripartite financing. This proposal would involve the creation of two new institutions: (i) a social insurance institution responsible for the affiliation of insured persons and the collection of contributions; and (ii) a collective retirement fund responsible for the administration, investment and provision of pensions. If this proposal were to be adopted, it would allow for the inclusion of a public component in the administration of the pensions system, combined with the creation of a public non-profit-making pension fund administrator (AFP), although governed by the same regulations as the private AFPs established under Legislative Decree No. 3500 of 1980.

With regard to the recommendation that representatives of insured persons should be able to participate in the administration of the system, the Government indicates that the pensions reform of 2008, as set out in Act No. 20255, promoted the modernization and reinforcement of the institutional framework of the retirement benefit system, particularly through the establishment of two advisory bodies: the users’ committee and the Pensions Advisory Council. The Government nevertheless considers that progress can still be made in guaranteeing more active social dialogue between workers, employers and the Government, particularly by: extending the powers of the Advisory Council to include not only the retirement benefits system based on solidarity, but the whole of the integrated pensions system; granting it the mandate to commission and disseminate actuarial studies of the retirement benefits system; and assessing, based on actuarial studies, the adequacy of current contribution rates in the system and making proposals for changes, where appropriate. Consideration is also being given to the inclusion of at least one workers’ representative and a minimum level of representation of women in any future public AFP.

Finally, with regard to the recommendation that employers should participate in the financing of old-age and invalidity benefits, the Government indicates that two of the proposals examined by the Advisory Commission envisage the establishment of an employers’ contribution to the financing of the retirement benefits system.

The Committee notes the various proposed reforms of the pensions system and hopes that the solutions selected will make it possible to give effect to the recommendations adopted by the Governing Body referred to above within a reasonable period of time.

Follow-up to the recommendations of the tripartite committee set up to examine the representation made by the College of Teachers of Chile AG under article 24 of the ILO Constitution

In reply to the Committee’s previous comments on this subject, the Government indicates that, in the context of the education reform and the dialogue launched between the Ministry of Education and the College of Teachers of Chile AG in the technical committee set up by the parties, it has been possible to conclude political and social agreements for the adoption of a series of laws benefiting teachers: Act No. 20804 of 2015 for the titularization of teachers covered by subsidized public contracts; Act No. 20822 of 2015 on the recognition of contribution years in the event of voluntary retirement; Act No. 20903 of 2016 establishing the system of further vocational training for teachers, which has had the effect of increasing the remuneration of teachers by an average of 30 per cent and is intended to reinforce the public education system and the role of the State as the employer of education professionals. The Government also refers to the existence of a Bill to establish a public education system, which will have an impact on the transfer of teachers from municipal authorities to the local services of the Ministry of Education. The Government indicates that this series of measures will make it possible to give effect to the recommendations issued in the context of the representation referred to above, by improving the administration by the State of the education system, bringing an end to its decentralization and to the heterogeneous nature of municipal budgets, and entrusting it to local services under the responsibility of the central authority. This will result in the improved management of the payment of retirement contributions, and the conditions of retirement for teachers will therefore be improved. According to the Government, social dialogue, and not only political dialogue, has given rise to these significant legal reforms that reinforce the public education system, while taking into account the concerns of the College of Teachers of Chile AG.

With regard to the reform of the pensions system, the Government recalls that, following the 2008 reform of the pensions system (Act No. 20255), a new pillar based on solidarity financed through public funds was introduced, in addition to the individual capital accumulation system, with the State thereby recognizing its role in guaranteeing the social security system. Over the period covered by the report, the President convened a Presidential Advisory Commission, composed of national and international experts, to review the retirement benefits system and produce an assessment and reform proposals intended to overcome the shortcomings identified in the system, particularly those related to the adequacy of the pensions received by low-income categories of the population. The Commission submitted its report, accompanied by recommendations, in September 2015, and the Committee of Ministers was requested to develop a programme consisting of medium- and long-term measures to improve the retirement benefits system. In this context, in August 2016, the Government proposed a further reform of the retirements benefits system, the main elements of which include: the establishment of a solidarity-based collective savings pillar; the reinforcement of the solidarity-based pillar created in 2008; the amendment of the legal regime governing AFPs with a view to guaranteeing the participation of workers in investment decisions, reducing costs and ensuring transparent administration; the creation of a public AFP; improved coverage of self-employed workers; and the revision of the legislation as a whole to prevent distortions.

The Committee notes this information and hopes that the reforms carried out will result in time in greater legal security in the conditions of service of teachers, particularly in relation to their pension rights, and the adoption on this basis of practical measures giving effect to the recommendations of the tripartite committee, as adopted by the Governing Body, with a view to increasing the level of the retirement benefits of teachers employed by municipal authorities. Please provide further information on this subject in the next report.

Observations of the National Confederation of Municipal Employees of Chile (ASEMUCH)

With reference to the observations made in 2011 by ASEMUCH considering that the remuneration taken into account for the purposes of the pensions of municipal employees under the terms of Legislative Decree No. 3501 had been unjustly restricted to the basic wage, with the exclusion from the calculation of certain other components of their remuneration, the Government refers to Opinion No. 15446 of 8 March 2013 of the Court of Accounts, under the terms of which there is no requirement to take into account for the purposes of the old-age pension certain components of the remuneration of municipal teachers solely intended to prevent a decrease in the net wages paid as of 28 February 1981, as these consist of bonuses intended to compensate for the fact that the teachers had been made responsible for paying the whole of their old-age insurance contributions. This measure was therefore essentially of a compensatory and transitional nature. As a result, the increase in the amounts established by Legislative Decree No. 3501 was merely intended to maintain the level of earnings of the workers as of 28 February 1981, and cannot be considered in the same light as the additional remuneration received subsequently. However, the allowances established as from 28 February 1981, which are not taken into account in the context of the increases established by Legislative Decree No. 3501, are generally taxable, and therefore subject to social security contributions. The Government considers that accordingly there is no violation of Conventions Nos 35 and 37, particularly with regard to the determination of the wage or remuneration taken into account for the calculation of contributions. The Committee notes this information.

Observations made by the National Association of Public Employees, the Association of Employees of the Women’s National Service, the College of Teachers of Chile AG, the National Confederation of Business and Services and the Confederation of Unions in the Banking and Financial Sectors of Chile

The Government indicates that the Presidential Advisory Commission is of the view that measures should be taken to ensure greater equity between the sexes in relation to the level of pension benefits, and equality of entitlements and obligations for men and women. The Advisory Commission therefore proposes the elimination of mortality tables differentiated by gender and the introduction of a unisex table. It is also proposed to reinforce compensation measures intended to remedy factors of differentiation that currently exist, both in the labour market and in the household, particularly through the recognition of the unpaid work carried out by women in the household. The Government indicates that the President has requested a ministerial committee to determine, based on the findings of the Presidential Advisory Commission, the reforms that are necessary in the short and medium terms and to determine issues which, in view of their complexity, require more detailed examination with a view to overcoming the shortcomings of the current retirement benefits system. The Committee endorses the approach of spacing out over time the required reforms based on in-depth studies in view of the fundamental nature for social security of the issue of equality between men and women, particularly in relation to pensions. In view of the interest raised by this issue among all member States, the Committee requests the Government to provide full explanations on this subject in its next report.

Conclusions and recommendations of the Standards Review Mechanism. Noting the Government’s indication that the suggestion of the Committee of Experts to envisage the ratification of the Social Security (Minimum Standards) Convention, 1952 (No. 102), will be drawn to the attention of the social and political partners in the context of the dialogue intended to improve the retirement benefits system, the Committee recalls that, at its 328th Session in October 2016, the Governing Body of the ILO adopted the conclusions and recommendations formulated by the Standards Review Mechanism Tripartite Working Group (SRM TWG), recalling that Conventions Nos 35, 36, 37 and 38 to which Chile is party are outdated and charging the Office with follow-up work aimed at encouraging States party only to these Conventions to ratify the Invalidity, Old-Age and Survivors’ Benefits Convention, 1967 (No. 128), and/or the Social Security (Minimum Standards) Convention, 1952 (No. 102), and accept, inter alia, the obligations under its Parts V and IX, as these represent the most up-to-date instruments in this subject area. The Committee reminds the Government of the availability of ILO technical assistance in this regard.

Observation (CEACR) - adopted 2015, published 105th ILC session (2016)

Follow-up to the recommendations of the tripartite committee representations made under article 24 of the ILO Constitution by the College of Teachers of Chile AG

The Committee takes due note of the adoption by the Governing Body at its 323rd Session (March 2015) of the recommendations of the tripartite Committee set up to examine the representation made under article 24 of the ILO Constitution by the College of Teachers of Chile AG in 2009, alleging non-observance of the Old-Age Insurance (Industry, etc.) Convention, 1933 (No. 35), and the Invalidity Insurance (Industry, etc.) Convention, 1933 (No. 37).

It notes, in particular, that the Governing Body noted the will of the Ministry of Education to improve the teachers’ wage and welfare conditions through social dialogue and to find a durable solution to the pension issues raised in the representation by establishing, together with the College of Teachers of Chile AG, a technical board, which is expected to submit concrete proposals to that end and to deliver its final report at the end of the first semester of 2015. The Governing Body also encouraged all parties concerned to reach a viable agreement in the very near future and requested the Office to provide the parties to the representation with any technical, consultative or conciliatory services and good offices, which they may request. The Governing Body ultimately requested the Government to send reports under article 22 of the ILO Constitution on the application of Conventions Nos 35 and 37 by 1 September 2015 containing detailed information on the measures taken to give effect to the conclusions and recommendations made by the tripartite Committee, as well as on the solutions advanced through social dialogue within the work of the joint technical board established by the Ministry of Education and the College of Teachers of Chile AG. These reports will be examined by the Committee of Experts on the Application of Conventions and Recommendations in relation to the follow-up on the recommendations adopted by the Governing Body in 1999 and 2006 on the previous representations submitted by the College of Teachers of Chile AG on similar issues.

Noting, however, that the Government’s report has not been received, the Committee urges the Government to provide, for examination at its next session, all the information requested with respect to how the Government has followed up on the recommendations of the tripartite Committee which were formulated as follows:

• – take the measures necessary for acquiring and preserving pension rights of the municipal teachers in conditions of legal certainty, uniform implementation and enforcement required for the proper functioning of the pension scheme based on capital accumulation accounts, in particular:

(i) to accept the responsibility, in compliance with Article 10(5) of the Convention and Article 11(5) of Convention No. 37, for the administrative and financial supervision of the collection and payment of pension insurance contributions by the municipalities and municipal bodies employing the teachers, establish effective mechanisms for recuperation of arrears of unpaid contributions and, where necessary for this purpose, provide appropriate contributions by the public authorities to the financial resources of the municipalities or to the pension benefits of the teachers, in compliance with Article 9(4) of Convention No. 35 and Article 10(4) of Convention No. 37;

(ii) to ensure participation of the representatives of the teachers and other categories of insured persons in the management of their pension schemes, including collection of insurance contributions and supervision of their effective payment into respective schemes by the municipalities and other employers in respect of their employees, in compliance with Article 10(4) of Convention No. 35 and Article 11(4) of Convention No. 37, and to engage the process of dialogue with the representatives of the teachers for this purpose;

(iii) to improve the effectiveness of dispute resolution and appeal mechanisms in pension matters concerning municipal employees, ensure prompt rendition of justice in these cases and execution of court decisions engaging the liability of the municipalities for unpaid contributions, in line with Article 11 of Convention No. 35 and Article 12 of Convention No. 37.

Observation submitted by the National Confederation of Municipal Employees of Chile (ASEMUCH). In a communication received on 30 May 2011, ASEMUCH considers that the remuneration taken into account to compute the pensions of municipal employees within the meaning of Legislative Decree No. 3.501 is unjustly restricted to their basic wage, excluding a number of other components of their remuneration in the calculations, and therefore violates Conventions Nos 35 and 37. According to ASEMUCH, taking into account only the basic wage for calculating the pension results from a misinterpretation of the term “in the portion subject to taxation” contained in section 2 of Legislative Decree No. 3.501, which is taken to be synonymous with the term “remunerations subject to taxation”. This interpretation is not consistent with section 5 of the abovementioned Decree, under which social insurance contributions are not paid on the total remuneration, considering that the portion that exceeds 50 times the monthly living wage is exonerated from contributions. ASEMUCH maintains that this restrictive interpretation of remuneration considered for pension purposes has resulted in reducing the level of contributions, the amount of funds constituted for pension purposes and, consequently, has also reduced the level of old-age and invalidity pensions paid to retirees.

In its latest report received in September 2012, the Government stated that the reply to comments from ASEMUCH is still being prepared by the Court of Accounts (Contraloría General de la República), in cooperation with the Under-Secretariat of Social Welfare and the authority responsible for monitoring pensions (Superintendencia de Pensiones), and will be sent as soon as it is available.

The Committee notes that the report which should have been submitted by the Government by 1 September 2015 would also have contained information in respect of the allegations raised by ASEMUCH. It also notes that ASEMUCH submitted additional information on 1 September 2015 on developments relating to the allegations. The Committee therefore requests the Government to supply a comprehensive reply to the allegations made by ASEMUCH in its next report taking into account the above conclusions and recommendations adopted by the tripartite Committee set up to examine the above representation.

Noting that the Government’s report has not been received, the Committee repeats its previous pending comments regarding the below issues:

Follow-up to the recommendations of the tripartite Committees. Representations made in 1986 and 2000 under article 24 of the ILO Constitution by the National Trade Union Coordinating Council (CNS) and a number of national trade unions of workers of the Private Sector Pension Funds (AFPs)

The Committee recalls that the non-observance by Chile of this Convention and the Invalidity Insurance (Industry, etc.) Convention, 1933 (No. 37), following the reform of the pension system in 1980, has been recognized for many years. This issue has given rise to two representation procedures under article 24 of the ILO Constitution in 1986 and 2000. In both cases, the Governing Body concluded that the Conventions in question were not complied with and called upon the Government to amend the national legislation to ensure that the privately managed pension scheme established by Legislative Decree No. 3.500 of 1980 be administered by non-profit-making organizations; that representatives of the insured are able to participate in the administration of the system; and that employers contribute to the financing of the old-age and invalidity benefits.

In its latest report, the Government does not refer to any amendments made to the private pension scheme which are likely to give effect to the abovementioned recommendations. For the most part, the Government provides information on the repercussions of Act No. 20.255 of 2008 on the Chilean social insurance scheme. The Committee notes that the reform of 2008, apart from the fact that it established a minimum pension scheme subject to a means test funded by the state budget, did not change the basic characteristics of the private pension scheme, in so far as, inter alia, the latter does not guarantee a defined benefit throughout the contingency and excludes the representatives of insured persons from participating in the administration of the pension fund. The social pensions based on the principle of solidarity established under Act No. 20.255 are non-contributory old-age and invalidity benefits paid to persons who are not entitled to a pension under other old-age insurance schemes, and who belong to the 60 per cent of the poorest households in the country. In this respect, these benefits cannot be considered as old-age and invalidity benefits in the context of Conventions Nos 35, 36, 37 and 38, as these Conventions provide for defined contributory benefits paid by old-age or invalidity insurance schemes. The Committee draws the Government’s attention to the possibility of carrying out an evaluation – by having recourse if necessary to ILO technical assistance – of the conformity of the solidarity-based pillar created under Act No. 20.255 with the requirements of Part V (Old-age benefit) and IX (Invalidity benefit) of the Social Security (Minimum Standards) Convention, 1952 (No. 102), which make it possible to give effect to these provisions by providing benefits to all residents whose means during the contingency do not exceed prescribed limits.

Communication submitted by the National Association of Public Employees (ANEF), the Association of Employees of the Women’s National Service, the College of Teachers of Chile AG, the National Confederation of Business and Services, and the Confederation of Unions in the Banking and Financial Sectors of Chile. The Committee notes the information sent by ANEF, the Association of Employees of the Women’s National Service, the College of Teachers of Chile AG, the National Confederation of Business and Services and the Confederation of Unions in the Banking and Financial Sectors of Chile, which was received at the Office on 15 September 2011. According to these organizations, the private pension scheme based on a funded pension plan results in discrimination against women in so far as it is based on sex-distinct mortality tables. This means that a man and woman with exactly the same amount in their capital accumulation accounts when they retire will receive different pensions entirely on account of their gender. In its reply, the Government states that the use of sex-distinct mortality tables to calculate men’s and women’s pensions is justified because women have a higher life expectancy. Using unisex tables would undoubtedly increase the pension level of women, but it would result in the available capital in women’s capital accumulation accounts being depleted more quickly. The Presidential Advisory Council for the pension scheme reform carried out studies on the introduction of unisex mortality tables and rejected this possibility for a number of reasons, among which: the risk that the insurance companies’ reserves might be inadequate; a reform of this nature would imply cross-subsidization between men and women: the lack of a comparative basis at international level, since no other country with a funded pension scheme has introduced unisex tables.

The Committee notes that the disparity between the pensions paid to men and women under the private pension scheme is a direct consequence of the nature of the system based on the capital accumulation retirement accounts of the beneficiaries. The Committee notes in this respect that, more than 30 years ago, the Supreme Court of the United States already considered that the Civil Rights Act of 1964 banned a contribution differential on the basis of sex in the context of a pension plan (City of Los Angeles v. Manhart, 435 U.S. 702, 98 S. Ct. 1370 (1978)). The Committee also notes that in 2011 the European Court of Justice ruled that different insurance premiums for women and men constituted sex discrimination and was not compatible with the Charter of Fundamental Rights (Test-Achats Case (C-236/09)). The Committee is also of the understanding that, in a resolution adopted in 2010, the Constitutional Court of Chile ruled that a gender criterion in risk factor tables used in the private insurance health scheme was unconstitutional (section 38 of Act No. 18.933 (Isapres)). In view of the preceding considerations, the Committee invites the Government to avail itself of the technical assistance of the Office so that it might study in greater detail the implications of using unisex mortality tables on women’s pensions and the ways to offset the negative effects caused by this practice.

[The Government is asked to reply in detail to the present comment in 2016.]

Observation (CEACR) - adopted 2012, published 102nd ILC session (2013)

The Committee invites the Government to refer to the comments made under the Old-Age Insurance (Industry, etc.) Convention, 1933 (No. 35).

Observation (CEACR) - adopted 2010, published 100th ILC session (2011)

Please refer to the comments made under Convention No. 35.

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

See the observation under Convention No. 35.

Observation (CEACR) - adopted 2000, published 89th ILC session (2001)

See the observations made under Convention No. 35.

In regard to points 1 and 2 of the said observation:

1.  Article 10, paragraph 1, of the Convention.  See under Convention No. 35, Article 9, paragraph 1.

2.  Article 10, paragraph 4.  See under Convention No. 35, Article 9, paragraph 4.

3.  Article 11, paragraph 1.  See under Convention No. 35, Article 10, paragraph 1.

4.  Article 11, paragraphs 1 and 2.  See under Convention No. 35, Article 10, paragraphs 1 and 2.

Observation (CEACR) - adopted 1999, published 88th ILC session (2000)

See under Convention No. 35, as follows:

1. The Committee has noted the conclusions and recommendations made by the committee set up to examine the representation alleging non-observance by Chile of, inter alia, Convention No. 35, made under article 24 of the ILO Constitution by the College of Teachers of Chile, AG (document GB.273/16/4, 274th Session, March 1999).

The allegations presented in the representation by the complainant organization relate to the failure to pay the social security contributions of teachers and the consequent responsibility on the public authorities. The Government did not refute the content of its international obligations and supplied detailed information on the institutional framework and the verification and supervisory measures exercised by the authority of the State. The Government also supplied information on some corrective measures designed to settle the arrears in payment of contributions. In its conclusions, the committee set up to examine the representation considered that, although the steps taken by the Government have improved the situation to some extent, further measures are necessary in order to ensure that the relevant Conventions are fully applied in practice. In particular, it recommended that the competent services carry out their tasks and strengthen their supervisory activities and that appropriate penalties be strictly applied so as to prevent the situation of arrears in contributions from recurring in future, and urged the Government to continue to ensure that the outstanding social security arrears, the scale of which should not be underestimated, are settled in full. The said committee also urged the Government to take all the necessary measures to ensure that the social security rights of teachers are restored; to continue and strengthen the supervision of the effective payment of social security contributions by the municipalities; and to ensure the effective application of deterrent penalties in the event of non-payment of social security contributions. The Committee also requested the Government to supply, inter alia, detailed information on the number of checks carried out, in particular by the Ministry of Education, to verify payment of social security contributions by the municipalities; the number and nature of violations registered and the number and nature of the penalties imposed; the number of municipalities remaining in arrears with regard to their payment of social security contributions, and the amount of such arrears; the number of workers affected and the amount of arrears settled.

The Committee of Experts notes the information supplied by the Government in September 1999 in response to the said conclusions and recommendations as well as the information which the College of Teachers communicated in October 1999 in connection with the representation.

In its report on the measures adopted to ensure effective payment of social security contributions for teachers, the Government refers to measures such as verification and supervision of payment of social security contributions along with government action and legislative measures to settle the amount owed by certain municipalities.

In regard to the verification and supervision of payment of social security contributions in respect of teachers, the Government indicates that it has adopted special inspection measures to be carried out by the supervisory bodies with competence in the matter which are: (a) the Ministry of Education, which has been authorized to retain from subsidies the amount of the social security contributions in respect of teachers which have not been paid into the social security institutions; (b) the Directorate of Labour, whose inspectors are empowered to impose the fines which sanction failure to comply with the obligation entailed in declaring and paying the remuneration and income of workers. The social security contributions duly declared in the AFPs and not paid, as is the case for most of the social security arrears incurred by the municipal corporations, can be covered by judicial methods, which lie within the exclusive competence of each AFP. With respect specifically to the municipal corporations, the Directorate of Labour carries out the following types of action: (i) it publishes in the bulletin of breaches of labour and social security legislation the list, supplied by the social security institution itself, of the municipal corporations which are in arrears of payment of social security contributions; in July 1999, these arrears amounted to 2,098,712,464 pesos; (ii) it carries out inspection measures at the request of concerned individuals or institutions. Among the administrative fines imposed are fines on municipalities in respect of social security matters which amount to a total of 966,918 pesos, imposed on 23 municipalities in the country; (iii) in two consecutive years, it has conducted special verification programmes in municipal schools. The information on the programme for 1998 allowed to review the social security situation in 75 schools with a total of 2,924 workers to be revised. No violations were recorded. (c) Administradoras de Fondos de Pensiones (companies administering pension funds) which, according to section 19 of Legislative Decree No. 3500 of 1980, are obliged to pursue legal action designed to recover the social security contributions in arrears in respect of their members. The superintendency of companies administering pension funds has specially instructed the AFPs in regard to recovery of unpaid social security contributions by means of three circulars (Nos. 336, 347 and 551) which relate to judicial recovery, the information procedure for employers who have not paid contributions to the AFPs and the records to supervise and maintain the information up to date respectively.

In regard to the total amount of social security arrears owed by the municipalities, the Government indicates that there has been a considerable decrease. At 20 April 1998, the total debt amounted to 7,534,544,602 pesos and involved 38 municipalities. In July 1999, 29 municipalities still had social security arrears in an amount of 5,791.8 million pesos, distributed among the following institutions: companies administering pension funds (AFPs), 3,261.6 million pesos; health provident institutions (Isapres), 394.3 million pesos; Welfare Administration Institute (INP), 1,951 million pesos; mutual societies or workers' welfare institutions, 148.9 million pesos. Under Act No. 19609 which allows money from the common municipal fund to be advanced to municipalities which have accrued social security arrears at 31 July 1998, an agreement to pay was to be signed with the municipalities of Quilpue, Villa Alemana, Lampa, Quinta Normal, Lota, San Clemente, Curacautín and Chimbarongo. The sum to be paid amounts to 4,300 million pesos updated at September 1999: 2,500 million pesos to the AFPs with resources provided under said Act and 1,800 million pesos in judicial transactions with the INP, set out in an agreement concluded with that institution. With this, the global figure at July 1999 of 5,791.9 million pesos would be reduced to 3,252 million pesos. Nevertheless, the search for alternatives permitting this situation to be settled definitively will continue.

With respect to the legislative measures adopted to solve the matter of social security contributions in arrears, the Government approved Act No. 19609 of 2 June 1999 which allowed the amount of 3,500 million pesos to be advanced to the municipalities which had social security arrears in respect of teachers. To this end, a period of 120 days was granted for the municipalities to conclude an agreement for advance of the amount required with the Ministry of Education or the Ministry of Health as appropriate. With reference to the case of subsidized educational establishments, the Act empowers the Ministry of Education to retain from the resources or subsidies due to the establishments an amount equivalent to the social security contributions of teaching staff that they should have paid and which are in arrears. Another legislative measure designed to safeguard the workers' social security rights is the approval and promulgation of a Bill under which the labour relations of a worker are maintained in force from the time of his dismissal for as long as the social security contributions in arrears have not been paid to the appropriate institutions. The Labour Code is thus amended to specify that if the social security contributions have not been paid at the time of dismissal, the dismissal will not result in putting an end to the labour contract and the contractual obligations of the parties shall remain in place.

The College of Teachers of Chile, AG indicates for its part that the teachers' trade union, contrary to the statement in paragraph 21 of the report on the representation, had never requested the Ministry of Education to lift the sanction involving suspension of payment of the educational subsidy to those bodies which did not pay the remuneration and contributions of its staff on time. With reference to paragraph 23 of the report, it indicates that according to information submitted in November and December 1998 by the sub-secretary of Regional Development and Administration to the Chamber of Deputies of Chile, more than 104 municipalities out of a total of 350 (namely 29.7 per cent) had social security arrears in the order of $23,442,000 and that this had increased by 7.39 per cent as compared with the previous report of the Government. The College of Teachers of Chile, AG declares its concern at the inadequacy of resources which must be provided under Act No. 19609 of 2 June 1999 to settling the problem of social security arrears; resources which amount to 3,500 million pesos. This mechanism is the only one envisaged to settle total accumulated social security arrears as at June 1999. Furthermore, section 7 of the Act provides special criminal sanctions or retention of the educational subsidy (in accordance with the Act on subsidies) for future arrears which might occur from July 1999 in this respect. The College of Teachers is of the view that the Act suppresses the possibility of penalizing the social security arrears accumulated during the 1980s and to June 1999 through the reduction of subsidies, or qualifying it as an offence of misappropriation of public funds in accordance with section 233 of the Chilean Penal Code. The teachers who depend on the municipal sector are subjected to the will of the municipalities to conclude agreements to settle this long-standing debt or the exercise of the inspection facilities of the social security superintendency and the AFPs to press the social security institutions to initiate and follow up judgements to pay prescribed by the Act, which has not occurred up to the present.

The Committee notes the special supervisory measures being carried out by the supervisory bodies such as the Ministry of Education and the Directorate of Labour. It notes in particular with interest the actions such as publication in the bulletin of offenders against labour and social security legislation of the list of corporations in arrears, the administrative fines imposed on municipalities in regard to social security and the special supervisory programmes for municipally run schools. The Committee requests the Government to provide information on the penalties which could be applied to municipalities which have not paid the social security contributions and on the results of any cases brought against such municipalities. It also takes note of the information relating to the amount of the social security arrears of the municipalities as well as on the number of municipalities that have social security arrears. It observes discrepancies between this information and the information provided by the College of Teachers of Chile, AG. It requests the Government to supply its comments on the discrepancy observed and to provide precise statistical information on the number of workers affected by the unpaid remuneration and contributions. The Committee notes the legislative measures adopted to settle the arrears in social security contributions. It notes with interest the amount of 3,500 million pesos which the Government has approved pursuant to Act No. 19609 of 2 June 1999 and the Bill under which the labour relationship of a worker is maintained at the time of his dismissal for as long as the social security contributions in arrears have not been paid to the relevant institutions. It requests the Government to provide information on the application of Act No. 19609, including on the number of municipalities which wish to take advantage of funds advanced in order to settle teachers' individual accounts.

2. The Committee notes the comments received on 20 October 1998 from the Unitary Occupational Front of Pensioners and Survivors of Chile (Region V) alleging that the adjustment of the pensions provided under the former system of redistribution of pensions is not sufficient in regard to the international standards ratified by Chile. The Committee also notes the Government's reply to these comments.

In its communication, the Occupational Front states that in the past 25 years the pensions dependent on the redistribution scheme have undergone serious deterioration and the Front refers to the facts that have produced this. According to the Front, pensions have deteriorated during two periods: the first stretched from 29 September 1973 to 10 May 1990 and the second from 11 May 1990 to 31 August 1998. In the first of them, it refers to a series of suspensions of the adjustment of pensions applied under legislative decrees. In the second, it refers to adjustments carried out at various periods, and to sectors excluded from such adjustments. Reference is also made to increments made to minimum and basic pensions.

The Government, for its part, supplies information to the effect that it is not possible to affirm that the system of updating or adjusting pensions provided under the former system of pensions is not sufficient in relation to the international standards ratified by Chile. On this matter, it indicates that the standards on the reassessment of pensions under Act No. 15386 of 1963 ceased to be applicable when they were replaced by an automatic adjustment system established in section 14 of Legislative Decree No. 2448 and section 2 of Legislative Decree No. 2547, both of 1979. In addition, pursuant to Legislative Decree No. 2444 of the same year, all the pensions that began before 1 September 1975 were specially readjusted so that from September 1978, they thus recovered their initial purchasing power. Since then, adjustments made to pensions have been equivalent to 100 per cent of the variation shown on the Consumer Price Index (CPI) during the corresponding period, with the sole exception of May 1985 when the adjustment granted was lower by 10.6 per cent than the CPI variation for the period from November 1984 to April 1985, and also in March 1987 and April 1988, when the adjustments applied to pensions at the highest rate were also less than the CPI variation. Pursuant to Act No. 18987, in July 1990, in conjunction with the automatic adjustment applied in accordance with section 14 of Legislative Decree No. 2448 of 1979, minimum pensions were adjusted by 10.6 additional points. Then, as provided in Act No. 19073, an adjustment of 10.6 per cent was applied to all pensions mentioned in section 3, as from 1 July 1999, stipulating different dates according to the amount of the pensions. In this way, since December 1992, pensions of the former system have recovered their initial purchasing power by maintaining in the present adjustment system compensation for the effects on them produced by inflation; it should also be noted that special adjustments have been granted to the lowest pensions designed to increase their amounts in real terms.

The Committee notes this information. In order to appreciate whether, in conformity with Article 19 of the Convention, adjustments to pensions are at least sufficient to cover the essential needs of the pensioner, the Committee requests the Government to supply statistical information in respect of the same period of time on the evolution of the cost of living and the evolution of benefits, including the amount of minimum pensions.

3. In regard to matters of principle, as indicated in its previous observation, in conformity with usual practice, the Committee decided to postpone its examination of the application of Conventions Nos. 35, 36, 37 and 38 pending the decisions to be adopted by the Governing Body in respect of the representation made in November 1998, under article 24 of the ILO Constitution, by various national unions of workers of pension fund administration companies. The Committee will therefore examine the information supplied by the Government in its report relating to the period 1998-99 in the light of the decisions adopted in due course by the Governing Body in the framework of said representation.

Observation (CEACR) - adopted 1998, published 87th ILC session (1999)

See under Convention No. 35, as follows:

The Committee notes the information provided by the Government in its latest report in reply to its previous comments. It notes in particular that the Government is examining, in accordance with the decision of the Governing Body at its 265th Session (March 1996), the possibility of ratifying Convention No. 128, which will result in the denunciation of Conventions Nos. 35 to 38. For this purpose, it has undertaken technical studies and analyses in order to determine whether Convention No. 128 can be applied, taking into account the current legislation, and particularly the system for the management and financing of pensions adopted in 1980, as well as the differences between Convention No. 128 and Conventions Nos. 35, 36, 37 and 38.

Furthermore, the Committee notes that at its 271st Session (March 1998), the Governing Body set up a committee to examine the representation made under article 24 of the Constitution by the College of Teachers of Chile A.G. alleging non-observance by Chile of Conventions Nos. 35 and 37. Moreover, at its most recent session (273rd, November 1998), the Governing Body declared receivable the representation made under article 24 of the Constitution by a number of national trade unions of workers of private sector pension funds concerning the system for the private administration of pensions and alleging non-observance by Chile of Conventions Nos. 35, 36, 37 and 38.

In accordance with its usual practice, the Committee has decided to suspend its examination of the application of these Conventions while awaiting the decisions of the Governing Body.

The Committee also notes the observations received on 20 October 1998 from the Unitary Occupational Front of Pensioners and Survivors of Chile (Region V) alleging that the adjustment of the pensions provided under the former system of the redistribution of pensions is not sufficient taking into account the international standards ratified by Chile. These observations were transmitted to the Government on 11 November 1998. The Committee has decided to postpone its examination of this question until its next session so that it can examine these observations in the light of any additional information that the Government may be able to provide in this respect.

Observation (CEACR) - adopted 1997, published 86th ILC session (1998)

See under Convention No. 35, as follows: Article 9, paragraph 1, of the Convention (employers' contribution to the financial sources of the insurance scheme); Article 9, paragraph 4 (contribution of the public authorities to the financial resources or benefits of the insurance scheme); Article 10, paragraphs 1 and 2 (administration of the insurance scheme); Article 10, paragraph 4 (participation of the assured persons in the administration of insurance institutions). The Committee notes the information supplied by the Government in its report for the period from July 1994 to June 1996, and the discussion on the application of the Convention which took place in the Conference Committee in June 1995. The Committee notes that the questions it raised in earlier observations following the adoption in 1980 of the new pensions system established in Legislative Decree No. 3550 (as amended) are still pending.

The Committee notes that a Government representative informed the Conference Committee that a consultation process would be initiated in the tripartite committee established in accordance with Convention No. 144 in order to adopt, with regard to Conventions Nos. 35, 36, 37 and 38, the necessary decisions to resolve the problems raised by the supervisory bodies.

The Committee recalls that the ILO Governing Body, in a decision adopted at its 265th Session (March 1996), asked States parties to Conventions Nos. 35 to 40 to consider the possibility of ratifying the Invalidity, Old-Age and Survivors' Benefits Convention, 1967 (No. 128), and, as appropriate, to denounce Conventions Nos. 35 to 40. The Governing Body pointed out that there is a close link between proposals for the ratification of the more recent and up-to-date Conventions and proposals that certain obsolete instruments might be denounced. It also noted that the implementation of decisions on standards review policy required member States to undertake tripartite consultations taking account, in particular, of the procedures provided for in the Tripartite Consultation (International Labour Standards) Convention, 1976 (No. 144), and the Tripartite Consultations (International Labour Standards) Recommendation, 1976 (No. 152).

In these circumstances, the Committee hopes that the Government will make the necessary effort to take appropriate measures to give effect to the decision of the Governing Body so that it will be able to remedy the failure to apply Conventions No. 35 to 38.

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

The Committee takes note of the information supplied by the Government in its report.

1. Article 10, paragraph 1, of the Convention. See under Convention No. 35, Article 9, paragraph 1, as follows:

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).

2. Article 10, paragraph 4. See under Convention No. 35, Article 9, paragraph 4, as follows:

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.

3. Article 11, paragraphs 1 and 2. See under Convention No. 35, Article 10, paragraphs 1 and 2, as follows:

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.

4. Article 11, paragraph 4. See under Convention No. 35, Article 10, paragraph 4.

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.

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

Observation (CEACR) - adopted 1993, published 80th ILC session (1993)

The Committee takes note of the information supplied by the Government in its report and in particular of the statistical data on the compulsory invalidity insurance scheme.

1. Article 10, paragraph 1, of the Convention. See under Convention No. 35, Article 9, paragraph 1, as follows:

In reply to the Committee's previous comments on this provision of the Convention which requires employers to share in providing the financial resources of the insurance scheme, the Government again indicates that the Individual Capital Accumulation Pension System, established by Legislative Decree No. 3500 of 1980, did not envisage any compulsory contribution by employers to the worker's Pension Fund, since that Fund is constituted by the worker himself with the compulsory contribution which his employer deducts from his wages every month, with such contributions as the worker may pay voluntarily into his individual capital accumulation account, and with such voluntary deposits as the worker may make as savings in what is termed a voluntary savings account. Furthermore, Legislative Decree No. 3500, section 18, provides for a voluntary contribution by employers to the constitution of the Fund's resources in the form of "Agreed Deposits" consisting of such sum or sums which they deposit in agreement with the workers, individually or collectively, in the individual capital accumulation account. Lastly, the Government reiterates that to specify who bears the costs serves no purpose since, in wage negotiations, the employer always takes account of the gross wage and the worker, the net wage, and that the problem is therefore only one of accounting.

The Committee takes note of this information. However, it observes once again that section 18 of Legislative Decree No. 3500 of 1980, as amended by Act No. 18964 of 1990, cannot be regarded as establishing a contribution by employers to the financial resources of the compulsory insurance scheme within the meaning of Article 9, paragraph 1, of the Convention, in as much as this merely tends to be 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. Consequently, the Committee once again expresses the hope that the Government will adopt the necessary measures to give effect to the recommendations of the Committee set up by the Governing Body to examine the representation submitted by the National Trade Union Coordinating Council (CNS) of Chile, under article 24 of the Constitution, alleging non-observance by Chile of, inter alia, Convention No. 35 (see document GB.234/23/28, 234th Session, 17-21 November 1986).

2. Article 10, paragraph 4. See under Convention No. 35, Article 9, paragraph 4, as follows:

In response to the Committee's previous comments concerning the financial contributions of the public authorities, the Government reiterates that the State's contribution to the Fund's resources is subsidiary and is laid down in sections 73 et seq. of Legislative Decree No. 3500 of 1980 as a state guarantee in respect of minimum old-age, invalidity and survivors' benefits for those insured persons who satisfy the requirements laid down in the Decree. The reason why the State's contribution is subsidiary is that the individual capital accumulation system encourages workers to save more during their active life with a view to obtaining a higher old-age pension. Consequently, the Committee is bound once again to refer to the conclusions of the Committee set up by the Governing Body, that "although the present legislation provides for the possibility of some financial participation by the State in the form of a guarantee, this participation, given its conditional and thereby exceptional nature, does not strictly correspond to the contribution to the financial resources or benefits of insurance schemes" prescribed by the Convention. The Committee again expresses the hope that the Government will adopt the necessary measures to give full effect to this provision of the Convention.

3. Article 11, paragraphs 1 and 2. See under Convention No. 35, Article 10, paragraphs 1 and 2, as follows:

In response to the Committee's previous comments, the Government reiterates in its report that the individual capital accumulation system provided for in Legislative Decree No. 3500 of 1980 entrusts the administration of the insurance scheme to institutions called "Pension Fund Administrations" (AFPs), which are limited liability companies which may be set up on the initiative of workers or their associations and it may be specified in by-laws that the profit they make shall be devoted to the grant of other social benefits to worker shareholders and their families. These institutions are entitled to payment from members, in the form of commissions. Accordingly, they are profit-making companies and were created as such, so that they would perform the task entrusted to them more effectively, and because the increased competition to attract new members would reduce the costs of their services. The Committee notes this information. However, it also notes the statement of the Government representative at the Conference Committee in 1992 that Act No. 19069 of 1981 allows trade union organizations, federations and confederations to set up their own pension fund administrations and does not require them to be limited liability companies.

In these circumstances, the Committee is bound to recall once again the recommendations of the Committee set up by the Governing Body, that the Government should adopt appropriate measures to amend Legislative Decree No. 3500 to ensure that the insurance scheme is administered by non-profit making institutions, as prescribed by these provisions of the Convention, except in cases where the administration of the scheme is entrusted to institutions founded on the initiative of the parties concerned or their associations and duly approved by the public authorities. The Committee also asks the Government to provide the text of Act No. 19069 of 1991, together with information on any new AFPs founded by workers' organizations, including those that are not limited liability companies.

4. Article 11, paragraph 4. See under Convention No. 35, Article 10, paragraph 4, as follows:

In reply to the Committee's previous comments, the Government indicates that Legislative Decree No. 3500 of 1980 does not provide for any compulsory mechanism whereby members of an AFP participate in the administration and direct management of the funds, except in the case of AFPs founded by workers. However, it does not prohibit such participation. Under the new system, there is a different form of participation whereby each worker is free to join whichever fund best suits him, either because a given fund yields greater profits than others, or because it requires lower commissions, or because it provides better services. Giving such a choice to the worker is the best form of participation in the administration of resources because it compels private companies to constantly improve their management of resources, which is to the direct benefit of members.

The Committee takes note of this information. It again refers to the conclusions of the Committee set up by the Governing Body that "the participation of insured persons in the management of the AFPs results neither from the current legislation nor from the statutes of these limited liability companies, which make no reference to them or to any occupational organizations ...". Consequently, the Committee again expresses the hope that the Government will give effect to the recommendations of the Committee referred to above, and adopt the necessary measures so that the representatives of the insured persons may participate in the management of all insurance institutions under conditions to be determined by national laws or regulations, in accordance with the provisions of the Convention.

[The Committee is asked to report in detail for the period ending 30 June 1994.]

Direct Request (CEACR) - adopted 1992, published 79th ILC session (1992)

Articles 12 and 21 of the Convention. The Committee has taken note of the Government's reply to the communication of 6 March 1990 from the Trade Union of Workers, Engineers, Specialists and Other Personnel of the Compañía Minera El Indio concerning determination of the invalidity pension in the event of a dispute.

In this connection the Committee recalls that it is not competent to express an opinion about the origin of invalidity in individual situations, which is a matter for the national authorities. The Committee has nevertheless noted with interest the Government's statement that it is open to the worker concerned to submit a new application for an invalidity pension to the Pension Fund Administration of which he is currently a member.

Observation (CEACR) - adopted 1992, published 79th ILC session (1992)

The Committee takes note of the information supplied by the Government in its report and in particular of the statistical data on the compulsory invalidity insurance scheme.

1. Article 10, paragraph 1, of the Convention. See under Convention No. 35, Article 9, paragraph 1, as follows:

In response to the Committee's previous comments, the Government repeats that Legislative Decree No. 3500 of 1980, which established the Individual Capital Accumulation Pension System, did not envisage any compulsory contribution by employers to the workers' Pension Fund, since that Fund is constituted by the worker himself with the compulsory contribution which his employer deducts from his wages every month, with such contributions as the worker may pay voluntarily into his individual capital accumulation account, and with such voluntary deposits as the worker may make as savings in what is termed a voluntary savings account. However, section 18 of Legislative Decree No. 3500 of 1980, as amended by section 1 of Act No. 18964 of 10 March 1990 provides for a voluntary contribution by employers termed "Agreed Deposits", consisting of such sum or sums which they deposit in agreement with the worker concerned, in the worker's individual capital accumulation account in order to add to the capital needed to finance an early retirement pension or to increase the amount of this pension. The Government adds that these contributions may be agreed upon between the workers and the employer individually or collectively.

The Committee has taken note of the detailed information supplied by the Government. It observes, however, that section 18 of Legislative Decree No. 3500 of 1980, as amended by Act No. 18964 of 1990, cannot be regarded as establishing a contribution by employers to the financial resources of the compulsory insurance scheme within the meaning of Article 9, paragraph 4, of the Convention inasmuch as this merely tends to be a possible supplementary contribution upon which the worker may agree with his employer without there being any legal obligation on the employer to bear its cost. The Committee consequently hopes that the Government will take the necessary measures to give effect to the recommendations of the Committee set up by the Governing Body to examine the representation submitted by the National Trade Union Coordinating Council (CNS) of Chile, under article 24 of the Constitution, alleging non-observance by Chile of, inter alia, Convention No. 35 (see document GB.234/23/28, 234th Session, 17-21 November 1986).

2. Article 10, paragraph 4. See under Convention No. 35, Article 9, paragraph 4, as follows:

In response to the Committee's previous comments concerning the financial contributions of the public authorities, the Government confines itself to repeating that Legislative Decree No. 3500 of 1980 provides for state contribution to the financial resources through the state guarantee, laid down in sections 73 et seq., of minimum old-age, invalidity and survivors' benefits for those insured persons who satisfy the requirements laid down in the Legislative Decree. The Committee cannot but refer again to the conclusions of the Committee set up by the Governing Body, that "although the present legislation provides for the possibility of some financial participation by the State in the form of a guarantee, this participation, given its conditional and thereby exceptional nature, does not strictly correspond to the contribution to the financial resources or benefits of insurance schemes" prescribed by the Convention. The Committee again expresses the hope that the Government will adopt the necessary measures to give full effect to this provision of the Convention.

3. Article 11, paragraphs 1 and 2. See under Convention No. 35, Article 10, paragraphs 1 and 2, as follows:

In response to the Committee's previous comments, the Government states that Legislative Decree No. 3500 of 1980 entrusts the administration of the insurance scheme to the Pension Fund Administrations (AFPs); these are limited liability companies, the authority for whose existence, supervision and control is entrusted to the Pension Fund Administration Supervisory Body, a state body whose chief powers are to authorise the formation or winding up of these companies and to check on the investment of resources and the composition of the investment portfolio. In addition, AFPs may be set up on the initiative of workers or their associations and it may be specified in their statutes that such profit as they make shall be devoted to the grant of other social benefits to worker shareholders and their families.

The Committee takes note of the Government's statement. It points out that the Pension Fund Administrations (AFPs), to which the administration of pensions is entrusted by Legislative Decree No. 3500 of 1980, are limited liability companies and therefore private profit-making institutions; the fact that these institutions are subject to state supervision does not change their character, even though such supervision may diminish the risks inherent in a private institution. In this connection the Committee observes that, according to the statutes of the AFP "Futuro S.A." supplied by the Government, the company, unless the board of shareholders unanimously agrees otherwise, shall annually distribute at least 30 per cent of the liquid profits for the financial year as a cash dividend to its shareholders in proportion to their shares. Furthermore, it is not made clear in those statutes that the AFP "Futuro" S.A. belongs to workers or to workers' associations even though the Government indicates in its report that that is the case. In these circumstances, the Committee cannot but refer again to the recommendations of the Committee set up by the Governing Body that the Government should adopt appropriate measures to amend Legislative Decree No. 3500 to ensure that the insurance scheme is administered by non-profit-making institutions, as prescribed by these provisions of the Convention, except in cases where the administration of the scheme is entrusted to institutions founded on the initiative of the parties concerned or of their organisations and duly approved by the public authorities. The Committee also asks the Government to continue supplying information on the establishment of any new occupational AFPs.

4. Article 11, paragraph 4. See under Convention No. 35, Article 10, paragraph 4, as follows:

In response to the Committee's previous comments, the Government repeats that, in accordance with this provision of the Convention, the workers participate actively in the management of the system. In addition to referring again to the seven Pension Fund Administrations in which the workers have part or total ownership and are represented on the board of directors, the Government supplies information concerning the AFP HABITAT. In this connection it states that in 1989 the board of directors of AFP HABITAT set up a nationwide Members' Participation Committee as one response to anxiety which had arisen among the shareholders; this Committee fits into the general policy pursued in the Chilean Chamber of Construction of maintaining bodies with workers' participation. This Committee, one of the first of its kind in the Chilean social insurance setting, is composed of 11 members including one pensioner and one trade union leader. The Committee holds meetings at which the insured persons are informed of the results obtained, the legal regulations and the general policies of the AFP.

The Committee takes note of this information. It again refers to the conclusions of the Committee set up by the Governing Body that "the participation of insured persons in the management of the AFPs results neither from the current legislation nor from the statutes of these limited liability companies, which make no reference to them or to any occupational organisations ... ". The text of the statutes of the AFP "Futuro" S.A., supplied by the Government, does not appear to invalidate this conclusion.

Consequently the Committee again expresses the hope that the Government will give effect to the recommendations of the Committee set up by the Governing Body, and adopt the necessary measures so that the representatives of the insured may participate in the management of all insurance institutions under conditions to be determined by national laws or regulations, in accordance with the provisions of the Convention.

Direct Request (CEACR) - adopted 1990, published 77th ILC session (1990)

Articles 12 and 21 of the Convention. The Committee takes note of the communication from the Union of Workers, Engineers, Specialists and Other Employees of the El Indio Mining Company, dated 5 June 1989, concerning the determination of invalidity pensions in a law suit. In its communication, the Union requests recognition of the entitlement to a common invalidity pension, in conformity with Legislative Decree No. 3500, with effect from the date of Opinion IV-0084-84. The above communication was submitted to the Government so that it could make any comments it deemed appropriate.

In this connection, the Committee wishes to point out that it is not its function to pronounce on individual situations, which is the responsibility of the national authorities. The Committee's function is to ensure that the national legislation provides for the right of appeal to tribunals, as required by the Convention. In this connection, the Committee notes the Government's statement that, as regards administrative bodies, there are various authorities to whom appeals may be referred, all of which come under an organ other than the one which manages the insurance. With regard to judicial bodies, it is possible to appeal before the labour courts whose attributions include settling appeals against decisions handed down by the administrative authorities concerning workers' insurance or social security. In addition, in the event of a law suit concerning the benefits, the insured persons and their dependents may claim their entitlements on the basis of section 390 of the Labour Code before the ordinary courts of law, whatever the administrative decision obtained, and even in the absence of, or against such a decision.

The Committee also notes that further comments on this matter, dated 6 March 1990, were received from the above-mentioned Union and that they would be communicated to the Government so that it could make any observations it deemed appropriate. The Committee hopes that the Government will be able to make its observations in time for the Committee to re-examine this case at its next meeting. [The Government is asked to report in detail for the period ending 30 June 1990.]

Observation (CEACR) - adopted 1990, published 77th ILC session (1990)

The Committee takes note of the information provided by the Government in its report for the period 1988-89; it also takes note of the statistical information.

1. Article 10, paragraph 1, of the Convention. See under Convention No. 35, Article 9, paragraph 1, as follows:

1. Article 9, paragraph 1 of the Convention. In reply to the Committee's comments, the Government reiterates that the monthly contributions for funding future pensions are wholly the property of the workers and that there is a one-to-one ratio between the amount deducted by the employer from each worker for insurance and the funds accumulated by that worker. At the same time, as the amount deducted depends on the worker's remuneration which is negotiated either individually or collectively with the employer, the latter makes a direct contribution to the constitution of the worker's pension fund, since, when the remuneration is fixed, the employer always takes into account the total costs related to labour. Thus, regardless of whether the contributions are paid by the workers or the employer, a balance will always be reached in accordance with the total amount that each enterprise is able to pay. Therefore, in a system of this kind the source of the contributions (whether coming from the worker's remuneration or the employer's contribution) is irrelevant, since in any event the original source is always the enterprise. Without prejudice to the foregoing, the Government is currently working on a Bill to create the Employer's Bonus, which is negotiable and whose purpose is to increase the worker's insurance assets enabling him to have access to early retirement or increase the amount of his pension. The bonus will not be subject to tax or deductions for insurance and will not have maximum or minimum limits. In this way, workers and employers will be able to prepare pension plans which may be increased, in the case of younger workers, by means of periodical deposits in their individual capital accounts or, in the case of workers who are closer to retirement age, by means of a lump sum deposit. With such a mechanism, the employers' contribution to the resources of the workers' pension funds will exceed their obligation to participate by means of contributions deducted from remuneration.

The Committee takes note of the Government's statement. In particular, it notes with interest the above-mentioned Bill and asks the Government to provide a copy of it. The Committee must stress, however, that in order for full effect to be given to this provision of the Convention, and to ensure the application of the principle of solidarity embodied in social security schemes, employers should contribute directly to the financial resources of compulsory insurance schemes for employees. In fact, when an employer pays the salary to workers, he or she is not necessarily covering the social security contributions. The Committee, therefore, hopes that the Government will adopt the necessary measure to give effect to the recommendations made by the committee set up by the Governing Body to examine the representation made by the National Trade Union Co-ordinating Council of Chile (CNS), under article 24 of the Constitution, alleging the non-application by Chile of, inter alia, Convention No. 35 (see document GB.234/23/28, 234th Session, November 1986).

2. Article 10, paragraph 4. In reply to the Committee's previous comments, the Government again refers to the various ways in which the State contributes financially to the resources of the insurance fund. In this connection it indicates that the policy with regard to the allocation of resources is to assist those most in need in the most effective way possible. Under this system, the State allocates resources to workers who are declared invalids and have paid contributions for at least two years out of the last five, or have paid contributions for ten years, or are paying contributions at the date on which the contingency begins if the latter is the result of an accident. With this mechanism, the State takes an active position with regard to its contribution to the insurance funds of those who are really in need, thereby maintaining an adequate policy of income redistribution. Thus, direct participation by the State during the active life of the worker is unnecessary, as this would not be sufficiently profitable to justify the allocation of public funds to persons who are not really in need. The Committee takes note of the above information. It asks the Government to indicate which provisions of the legislation fix the minimum contribution period, referred to above, required for the State to guarantee the minimum pension. Moreover, the Committee is bound to refer to the conclusions of the committee set up by the Governing Body, that "although the present legislation provides for the possibility of some financial participation by the State in the form of a guarantee, this participation, given its conditional and thereby exceptional nature, does not strictly correspond to the contribution to the financial resources or benefits of insurance schemes" prescribed by the Convention. Consequently, the Committee again expresses the hope that the Government will adopt the necessary measures to give full effect to this provision of the Convention.

3. Article 11, paragraphs 1 and 2. See under Convention No. 35, Article 10, paragraphs 1 and 2, as follows:

3. Article 10, paragraphs 1 and 2. In reply to the Committee's previous comments, the Government indicates that the Chilean Social Insurance System fully complies with these provisions of the Convention, since the law gives broad scope for any worker concerned, or group, to found a Pension Fund Administration (AFP), and establishes the AFP Supervisory Body. In addition, the Government again refers to the facilities provided for groups of workers to form their own AFPs and states the names of those that already exist, their composition and the role and participation of the workers in them. The Committee again takes note of this information. However, it observes that no new AFPs have been created and that the Government has not provided a copy of the statutes of the AFP FUTURO, requested previously. In the circumstances, the Committee reiterates its request and asks the Government to continue to provide information on the establishment of new occupational AFPs. Lastly, it recalls once again the recommendations of the Committee set up by the Governing Body, that the Government should adopt appropriate measures to amend Legislative Decree No. 3500 to ensure that the insurance scheme is administered by non-profit-making institutions, as prescribed by these provisions of the Convention, except in cases where the administration of the scheme is entrusted to institutions founded on the initiative of the parties concerned or of their organisations and duly approved by the public authorities. 4. Article 11, paragraph 4. See under Convention No. 35, Article 10, paragraph 4.

4. Article 10, paragraph 4. In reply to the Committee's previous comments, the Government again states that the workers participate actively in the administration of the system. In this connection, it refers again to the seven Pension Fund Administrations (AFPs) in which the workers have part or total ownership and are represented on the board. The Government indicates that workers also participate by choosing freely the AFP which will administer their insurance funds, in accordance with the law, which grants this right to all those affiliated to the system. Furthermore, a worker affiliated to a given AFP may transfer at no cost to another AFP when and as many times as he so wishes, according to the one most suited to his needs or in which he feels he is best represented, and he may be an active or passive, employed or self-employed member. This active participation by workers has been witnessed on various occasions, when workers or groups of workers have manifested their discontent over some specific action on the part of an AFP, and have withdrawn their funds and placed them with another AFP. The wide personal and active involvement of workers in the administration of their funds and the selection of their representatives is the basis of the Chilean insurance system.

5. With regard to its previous comments concerning the lack of participation of insured persons in the administration of the institutions of the old system, the Committee takes note of the information provided by the Government, to the effect that, although the attributions of the administrative boards of insurance funds have, for the time being, been conferred on the Director of the Institute for the Standardisation of Insurance Schemes by section 6 of Legislative Decree No. 3502 of 1980, or on the persons responsible in those bodies which have not yet merged with the above Institute, in accordance with the provisions of section 71 of Act No. 18768, this is only a temporary system which is gradually being replaced by the new pension system established by Legislative Decree No. 3500 of 1980. [The Government is asked to report in detail for the period ending 30 June 1990.]