SANTIAGO, Chile -- Instead of paying social security taxes and wondering whether the government will ever deliver promised retirement benefits, Chilean workers bankroll their own retirements and manage their nest eggs.
In visits to modern customer service offices as common as bank branches in this city of 5.5 million, they move money from one stock and bond fund to another and use ATM-like machines to make sure that monthly salary deductions go into pension savings.
Two decades after Chile's military dictatorship scrapped the country's broken and bankrupt government-run social security system and replaced it with privatization, forced retirement savings by everyone who gets a regular paycheck is a way of life.
Chile's pension system is hailed as a model for the world because workers fund their old age pensions, though critics point out that it doesn't cover the self-employed and legions of workers who float from job to job and contribute infrequently.
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"I'm not in it and probably never will be," said Ignacio Ibacache, 47, who makes about the monthly minimum wage of $207 taking pictures of tourists in front of Santiago's central cathedral.
In his hip restaurant in a bohemian part of Santiago, Rhony Castro knows he should be contributing but hasn't for years.
"There's always some crisis that comes up in this business, so I just say 'I'll get through this one and start contributing,' but I never do," said Castro, 48. "Most small businessmen here work until they die, and I'll probably be one of them."
http://www.newsday.com/news/nationworld/wire/sns-ap-social-security-chile,0,506438.story?coll=sns-ap-nationworld-headlinesChile Official Guides Privatized PensionsSANTIAGO, Chile -- As a 30-year-old economist, Jose Pinera revolutionized Chile's pension system in 1980 while he was secretary of labor and social security during the country's dictatorship under Gen. Augusto Pinochet.
Pinera, the architect of the country's privitized system, is now an internationally-recognized advocate of replacing government "pay as you go" social security with private pensions where workers bankroll their retirements with investments in mutual funds.
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AP: Chileans of all classes seem to lack knowledge or interest determining savings needed to reach retirement goals. What is the extent of this problem and how can it be overcome?
Pinera: I do not have a definite assessment on this since it is a highly empirical issue. Now, it is true that it is part of Latin culture leaving things for the last moment in every aspect of life. Of course, the government, the (fund administrators) association, modern trade union leaders, etc., should do more to create a culture of responsibility in societies that have had a weak one for 500 years. And it takes time.
What is absolutely clear is that a defined contribution system, or capitalization system, clearly encourages responsibility, while a defined benefit system, whether government or private, clearly encourages indifference. http://www.newsday.com/news/nationworld/wire/sns-ap-social-security-chile-qa,0,3120949.story?coll=sns-ap-nationworld-headlinesGot that? Chile does it like capitalists. We do it like, um, jerks :shrug: Bet we'll be hearing lots more about the bushies' new best friend.