There will be no privatization Ecuadorian Social Security Institute (IESS)the minimum retirement age or percentage of contributions is not increased and the rights of current retirees or those about to retire are not reduced, nor are the contributions made by the half-way branches before the reform.

The commission that presented the proposal for the reform of the IESS pension system highlights these four points that remain intact, responding to the aspirations raised in the process of consultation with civil society carried out these months in 30 meetings for analysis and discussion in Quito, Guayaquil and Cuenca.

How much a person must have for a pension in Ecuador according to their age is stated in the reform proposal that entered the public debate

The proposal proposes a system of three pillars:

In relation to the first two pillars, which include related companies, three axes can be distinguished: reforms of the parameters of the IVM pension system, incorporation of old age savings plans and reforms of IVM management.

This is a proposal to reform the pension system

1. Strengthen the regulations for the implementation of Article 2 of the existing Social Security Act, which establishes that, among others, self-employed workers, freelancers and independent workers are subject to the protection of compulsory general insurance as related entities.

2. The old-age pension will be the sum of two components:

3. Currently, pensions are calculated based on the five best years of earnings of the contributor’s working life. With the reform, that number of years will gradually increase up to 30 years of better salary.

4. Although the current contribution rate of 11.06% (of the total employee and employer contribution) is maintained, it will also apply to the thirteenth and fourteenth salary, given that pensioners will continue to be paid fourteen pensions.

5. Retirement requirements: the minimum retirement age remains at 60, but the required contribution years increase gradually (six months a year). In this way, there will be a transition of at least ten years, in which the following table of minimum conditions for retirement is achieved:

savings plans

The reform proposal designed by the Commission “will create a modern legal framework that supports the healthy and strong development of savings plans for old age, which builds on the “seed” of pension savings that already exists in Ecuador, among which very importantly includes the current a fund for the unemployed, which is, in fact, a savings fund for each member’s old age.” The future savings ecosystem will be diverse and will have mandatory and voluntary components.

Management of IVM

It is proposed that the IVM get its own governing body, separate from the one that governs the health system, but will remain within the IESS. The new management of IESS-Pensions will have six members:

This collegial and specialized body will be the same one that manages IESS Bank (Biess).

additional recommendations

The Commission’s proposal is not binding for the government or the political sector. However, he expects that it will be openly, widely and civilly discussed in order to incorporate new inputs that will lead to the final drafting of the bill.

The commission consists of Augusto de la Torre as coordinator, Andrea García, Doménica Cobo, Karla Morales, Fabián Vilema, Andrés Hidalgo and Pablo Lucio-Paredes.