AND “super-progressive” process of changes, the transition of which will last a total of thirty years, from the approval of the reform until all members are already in the new system is the proposal of the Citizens’ Commission for Pension Reform Ecuadorian Institute for Social Security (IESS). The proposal, according to Augusto de la Torre, the coordinator of the Commission, seeks to enable what Ecuadorians want: that the pension system live for another 50 years. Otherwise, it could take another four or five years because of the series of problems it presents.

In addition to the three pillars that were already superficially known, which consist of a change in the number of years of contributions from 30 to 35 years (which would last 10 years); extending the number of the best years of salary for pension calculation (from 5 to 30 years, each year increasing by one year), and pension calculation according to years of pensionable service, there are many more proposals.

One of them is setting the upper limit of the state contribution, which will amount to 40 percent of pensions, but must not exceed 3 percent of GDP. In addition, the pension will have two components (basic and variable). The first will come from exactly 40%, but will be distributed evenly across all branches, while the variable will be based on salary and through a calculation formula. In addition, the proposal foresees that in six months the IESS i Finance reaches an agreement to pay 40% of the debt (which is between $2.4 billion and $2.6 billion).

It is also proposed to form a new directorate within the IESS which would be in charge of pensions and which would consist of a delegate from the branches, another from pensioners, another from Montepíos and two independents. This will not be run by Finance. The current Board of Directors would be in charge of health issues.

These were the main features of the proposal presented for almost two hours by the coordinator of the Commission, Augusto de la Torre, in front of an audience made up of retirees, academics and the media. Thus, this Wednesday in the hall, a discussion began on possible reforms in order to make the IESS sustainable over time and so that it would not end up in a situation where there would be a lack of dollars for the payment of pensions in a few years. 1 University of America (UDLA Park).

The first reactions of the citizens to the new legal proposal were a wide range of views, among which there was talk that the proposal was based on wrong data, others who interpreted the proposal as privatization and even those who said that IESS should disappear.

Milton Molina, vice-president of the Ambato Electric Retirees’ Association, on the other hand, supported the Commission’s work and explained that such parameter changes should have been made many years ago. He regretted that there were incompetent governments in the IESS that did not give in to what the law requires, which is the revision of pension seniority and contributions every five years.

On the other hand, another person present asked if it had been thought about what would happen if IESS disappears or if we make it disappear?

Augusto de la Torre’s answer was clear: – It is certainly not desirable. He explained to the assistant that the pension system is part of the country’s Social Contract, and therefore public policy. This would mean that every Ecuadorian manages as he can and dies as he can. They accuse me of being a freelancer, but I have nothing to gain from that, I am sure that the issue of age is not solved by the market, we need a public policy, he explained.

In addition, there were pensioners who felt that the Commission’s proposal starts from a false foundation when it tries to solve the pension issue, not the health issue. For them, there must be a comprehensive solution that deals with pensions and healthcare.

Additionally, De la Torre was consulted about various organizations announcing mobilization if the reform was approved. An economic expert on the subject said that he is ready to join the marches because he agrees with the demand to fix the system.

But there were also positions that consider the Commission’s proposal to be privatization. De la Torre clarified that the Commission proposes that the existing balances of unemployment funds and reserve funds continue to be managed by IESS and be invested in Biess. However, he assured that it is essential to improve Biess in order to do well. “We are not suggesting that there is a flow stock according to private funds”, he explained. However, if there is additional voluntary savings, there could be other administrators.

In addition, there were those who thought so self-employed workers should not be forced to join. This is because the reform of the law states that, in order to be able to collect, a self-employed worker must be connected and thus pay into the IVM and the unemployment fund. However, they are not obliged to enroll in health insurance if they already have private health insurance.

De la Torre explained that the law dictates that independents are obliged to become members and that is why they propose reforms that make it attractive to be part of the system

De la Torre clarified once again that the proposal is not binding and that it is now in the hands of the Government, future governments and civil society what to do with the proposed reform. Although it could be thrown in the trash can and not done, it is necessary to talk and look for a quick solution, because the situation of IESS is complex. For example, the demographic issue is a problem, because in order for the system to survive it must have eight connected contributors to support the retiree. This is part of the intergenerational coverage system. But by 2080, due to the consequences of demographic development, in which there are fewer and fewer children and young people, there will be only one member per pensioner.