Increase the contribution age from 30 to 35 years, although it maintains a minimum age of 60, in order to be able to retire. Expand the number of prime years which are taken into account for the calculation of the old-age pension. Encouraging people to retire later with the promise of a higher pension. These are the three proposals being addressed by the Citizens’ Commission established by the Government for the pension reform of the Ecuadorian Social Security Institute (IESS) to give sustainability to a system that currently presents several risks.

This Commission, Coordinated by the professor and former chief economist of the World Bank for Latin America, Augusto de la Torre, this Monday, July 3, he will present his proposal to the President of the Republic, Guillermo Lasso. And on Tuesday the 4th, there will be the first presentation to civil society through two events under the motto “Secure retirement, my future is today”, one at the Universidad de las Américas, in the morning, and at the Universidad San Francisco, in the afternoon.

The last time the retirement age in Ecuador was changed was 22 years ago and it is now back up for debate

Augusto de la Torre confirmed that the Commission’s proposals, which are not binding, are input for this or the next government, They do not intend to limit the minimum retirement age or the rate of contributions paid by IESS affiliates.

However, it confirms the possibility of increasing the number of contribution years. Is it currently a person can retire with at least 60 years of age and 30 years of contributions. However, to give the system sustainability, it would be considered that the contribution years are not 30, but a minimum of 35.

When asked whether, in practice, this increase in seniority affects the retirement age, he says “no”. He comments that minimum eligibility requirements are determined by a combination of minimum age and minimum contribution years. “So, We suggest keeping the minimum age: you can retire at least 60 years old if you have completed 35 years of contributions. Then there is a table that lowers the minimum years of contributions needed to the point where you decide to retire at over 60. For example, if you decide to retire at the age of 70, you can do so if you have only completed a minimum of 15 years of contribution.

He also explains that the change would be gradual. “If the reform were to be approved, the contribution years needed to retire at age 60 would go away it gradually increases (6 months a year) until the new minimum of 60 years with 35 contributions is reached. Therefore, if someone is now 59 and contributes for 29 years, they will have to wait until they are 61 to retire.”

How much can I now receive in retirement from IESS according to my age and the years of paid contributions?

Additionally, according to current regulations, a retirement pension is calculated according to the best five-year salaries. The idea is to extend the number of years, to make a calculation that is more proportional to what is actually contributed. According to De la Torre, the idea would be to increase it by one year every year until it reaches 15 or 20 years.

AND The third point, he adds, is that the pension is better the more years of service the member has. This refers to benefit years, relative to life expectancy after retirement.

De la Torre comments that these points are only part of a much more comprehensive proposal. The discussion process and citizens’ participation is reported via the website https://jubilacionsegura.ec/.

For Mauricio Espinel, from the Committee for the Study of Social Security, the entity that contributed to the discussion convened by the Citizens’ Commission, also known as the Inter-Institutional Commission, the Commission’s work enabled a discussion on the sustainability of the pension fund.

This he considers a big step, if you take into account that before they “didn’t see beyond their nose” and it was said that there was no problem, but they were convinced that there was a lot of money in the background, without looking at the subject actuarially, that is, into the future, he comments. It has also allowed sectors of society such as the Unitary Front of Workers (FUT) to react and seek the creation of their own commission to discuss the matter, which is also positive.

As for the diagnosis, according to Espinel, it was found that It is not sustainable to continue to finance the contribution of 40% of pensions provided by the state from the taxes of all citizens. He assures that some governments have refused to pay, as happened in correísmo, and others pay part and are late. He explains that this 40 percent will not be enough to cover pensions in a few years, so other alternatives must be sought.

All these problems, in his opinion, mean that the death certificate of the IESS pension is foreseen for two or three years without a state pension, and with a contribution it could be extended a little more, but in the future even with that contribution it will not be sustainable.

Therefore, Espinel ensures that the issue of sustainability is at stake. Among the reasons, for example, is that eight active contributors are currently needed to support pensioners, and now that number is gone, there are five per member, but in a few years there will be four or less.

For Espinel, the options to improve the sustainability of the IESS should go through increasing the retirement age and adjusting rates. In a personal way, he says that the proposal v the commission “will be lukewarm, on the cold side”. He believes that any proposal will present limitations and that it is not to anyone’s liking, and that all the necessary variables must be managed to ensure sustainability for at least 30 years. Another issue that should be reformed is investments. According to Espinel, IESS Bank (Biess) must disappear because it has not fulfilled its goal. “It’s an administrative burden because of the amount of fat he has and no muscle.”

The expert adds that changes in the fund could be made without the need for a new law, simply by decisions on increasing the number of years according to life expectancy. But, he says, the Board of Directors was not brave enough to do that.