Pension reform: State would contribute 5% for the pension of independent workers

On May 26, the Labor and Social Security Commission of the Congress approved by majority a minority opinion to reform the current scheme through the Universal Comprehensive Pension System (SIUP).

This proposal —previously supported by Sigrid Bazanhead of the working group— is made up of three pillars that we will detail:

In the first it would be given a universal basic pension to all those over 65 or people with disabilities with the resources of Pensión 65 and Contigoas well as with other necessary budget items.

The second covers dependent and independent workers: in the first case the worker will contribute 9%, the employer 2% —progressively reaching 4%— and the State, 1%, while for entrepreneurs, a voluntary contribution of 5% will be required and another 5% by the State. Said scheme takes as a reference income up to five minimum remunerations. If there is a surplus, it will necessarily go to the third pillar.

In the third pillar will be those who exceed the mentioned threshold and only here the AFPs will be able to participate, although the user will be able to determine if their funds are managed by a public entity.

How much would the pension be?

Affiliates will be entitled to a pension after contributing for at least 15 years or reaching 180 contribution units. The minimum monthly pension would be set equal to 40% of the affiliate’s reference income and would rise 2.5% with each year or 12 contribution units.

Finally, to help mypes in the transition, a three-year moratorium will be established for companies that use the SIUP.