Chile: Female pensioners receive one-third less than men

Chilean legislators meet with CENDA's
experts. (Photo: Congress of Chile)

Cámara de Diputados de Chile

Men who retire under the new Chilean pension system – exhibited as a model throughout Latin America – obtain now an income 33 per cent higher than women who have saved the same funds, informed researchers Manuel Riesco and Mireya Baltra, of the Centre for National Studies on Alternative Development (CENDA, national focal point of Social Watch) to the Chamber of Deputies of that country.

Based on a detailed study, Riesco, vice-president of CENDA, warned the Commission to Overcome Poverty of the Chamber of Deputies, that the current system of Pension Fund Administrators (AFPs) subjects women to discriminatory treatment.

“The private pension system makes odious distinctions according to the sex of affiliates, since it projects a longer life expectancy for women, which reduces their monthly pensions”, said legislator Cristina Girardi, of the centre-left Party for Democracy (PPD), after reading the report during a previous meeting of the Economy Commission of the lower chamber, which was attended by researchers of CENDA and female deputies of all sectors.

Female deputies expressed their surprise at the study and committed themselves to analyze all the background information so as to end this discrimination by legislative means as soon as possible.

Riesco, one of the authors of the research supported by the Ford Foundation and UN Women, informed that women who stayed under the old system have the right to retire at the age of 60 with a life annuity identical to that of a 65-year-old man, provided they earn the same salary and have the same number of years of contribution, no matter their marital status and number of charges.

On the other hand, the AFP system determines that a single 65-year-old man receives now one-third more than a single 60-year-old woman, having the same accumulated fund. Even if she postponed the decision to retire from the age of 60 to 65, the pension of a retired man under similar conditions would be one-sixth higher, stated Riesco.

Furthermore, pensions for people of both sexes who have retired under the new system turn out to be significantly lower than those received by men and women under the previous plan, even with the same salaries and years of contribution, according to CENDA’s report.

The situation is even more serious in the case of married people and of those who have more persons in their charge.

“In addition, the system’s high administration costs have absorbed four-fifths of profits obtained by pension funds, which, on the other hand, mostly vanished into thin air during the recent global crisis”, indicates the report.  

Given the fact that sex is the only factor for discrimination when it comes to calculating pensions, for a same fund, female pensions turn out to be necessarily lower than male ones, since they generally have less pension funds, they retire earlier and, on average, they live longer than men.

The President of the Commission to Overcome Poverty of the Chamber of Deputies, Lautaro Carmona (Communist Party) expressed he was “shocked”. “The damage may amount to 50 per cent between men and women who have contributed the same funds, which implies a discrimination that is only based on a quite unethical consideration, such as the life expectancy of women”, he criticized.   

Instead of being punished, women should be rewarded for their contribution as mothers and educators, he added.

Deputy María Antonieta Saa (PPD) questioned the fact that the longer life span among high social sectors, such as that of the inhabitants of the district of Las Condes in Santiago, who live nine years longer than people living in the poorest districts, is not considered among the variables.