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

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

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.