The Ecuadorian Social Security Institute (IESS) sooner or later will have to reform its pension calculation system and although there is no date yet for the submission of a bill to the National Assembly for this, it must first be defined what to do, said IESS President Eduardo Peña, explaining the ideas that are analyzed to ensure that there are funds to cover retirees’ pensions. The previous government already drafted a proposal that sparked a debate a few months ago, now a less aggressive proposal is being considered.

What parameters are analyzed?

We are still discussing the level of contribution, which amounts, because the Assembly will discuss, it can change everything we propose. The idea is to go with a proposal that is very politically digestible. Obviously you have to regulate the number of pension contributions, maybe increase it; increase the percentage of collection per member – now it is 20.6% – and the proposal is to do it progressively for at least 15 years, little by little, so that in 15 years the problem will be practically solved if the proposal is accepted and if we vote under these progressive conditions , because we think it is very unlikely that the Assembly will want to approve such a thing if we do it all at once. Special pensions (for harvesters or cement workers) must be regulated, they must disappear, they are not sustainable over time, they are against the proportionality of the pension amount and the number of contributions.

And then the structure of IESS must be modified. We believe, as stated in Augusto de la Torre’s report, that the Board of Directors should include an actuary, as this is essential for the possibility of projecting numbers into the future. But all this must be complemented by the thinning of the social security structure, it has been a political robbery of several successive governments and it has made it very fat, and one of the ways of this thinning is informatics and we are working with the Inter-American Development Bank (IDB) to get no only financing, but a software internationally… it goes from the purchase of medicines to the discharge of a patient by patient… Regarding the purchase of medicines we also have two possibilities (the United Nations agency and the Pan American Health Organization) to buy medicines in a transparent way.

Healthcare operates in the red, it costs us 500 million dollars a year in deficit to serve the entire public.

And does it have anything to do with taking care of members’ children?

It comes from there. When you have multiple participants who are not contributing, there is a lack of money somewhere. If we count on 3,160.00 members increasing by November, if the membership continues to increase and we could get to 6 million, part of the problem will be solved, but we won’t do it in 18 months, we won’t We will do it in 18 months. We will do it in three or four years if economic conditions are good.

So, the reform does not have a date for sending it to the Assembly?

There is no date yet, because first we have to agree on what we will present. What I can guarantee is that he will leave before I leave, I hope I went to the Assembly to make a presentation and bring graphics and say this is reality, this is the expectation, this is what we will do, change, this is what we need. .. they can say that we don’t want that and move on.

What is the polynomial formula you were talking about?

That’s what IESS did. The polynomial formula is 78% of your best income from your best years and taking into account the number of contributions you had, if you were only 15 years old that will be the value, but if you were 30 years old the number will be more favorable. What it does is pay a pension that has several factors in the formula, the more contributions paid, the closer you will be to your salary, closer to 78% of your salary. The earlier you start contributing and the later you retire, the more you will earn. If I reward people who stay until they are 70, they will not retire, they will continue to contribute for another 5 years. If they stay until 75. even more. This corrects the distortions of atypical quantities.

And voluntary membership?

We have 6,000 foreigners who pay a basic membership fee, who somehow got an Ecuadorian identity card and joined and paid a minimum of $80, but they have all the rights in Ecuadorian hospitals, and many of them are chronically ill, there are Colombians, Venezuelans, Americans, foreigners in general . We discovered 6,000 who pay the minimum wage and are heavy users of social security.

If you voluntarily enter with the minimum, IESS provides services for you, your wife and your children, when you retire, if you pay the minimum, the pension will be $400. The problem with distortions is when they say ‘bosses’ I’m ‘going to retire, increase my contributions so I can get more.’ There is nowhere else to go. That failure of the best 5 years, let it be 15, is part of the proposal.

That was the cashier where you said ‘the children come, give them fourteen pensions (with the thirteenth and the fourth). There is money, IESS is rich’, it was. You have money today, but if we don’t fix it in three years there is no way to pay.

Who should guess that?

Someone will pay the salary, what if we do nothing. Pensioners grow by 40,000 per year. We have 500,000, today we pay them 390 million dollars a month in pensions, we collect 430 million dollars a month in membership, we have lenders to whom we owe more than 1000 million dollars, we have 2400 million dollars in receivables, where do these debts come from people In the pandemic he could not pay or before .

Proposal: 84 months to pay, consolidate principal plus interest, divide by 84 and pay us every month. We are in discussion, the Bank Management must approve the project. They are around 2,000 million dollars, in theory 40% is uncollectible.

And the debt to the state?

Everywhere you look there is a skull, what will happen if we do nothing in three years? You’re going to have 600,000 retirees going outside of Carondelet and saying ‘pay me a pension.’

What measures will be taken outside of legal reform?

Supply hospitals well, collect what we can collect using the 84 payment system and pay suppliers without affecting liquidity (assets). This is what I plan to do in 18 months. In addition, there are properties that are on loan, which do not represent income to IESS and for which alternatives are sought (rent or transfer of the property)… And by the way, this question software, The IESS must be reduced and a digital operating system added to it.

What about private providers?

Private providers with 30% or 40% occupancy have reached 98% occupancy with IESS. Almost all the providers who have come to provide services to IESS are between 60% and 90% of the hospitalizations that come through IESS and because of this they are not only desperate to be paid, but willing to pay bribes to get paid, which is another problem , between 4% and 8%. When you’re going to pay someone $3 million, 4% is a lot of money.

They already detected that, what’s the plan?

It has been discovered for a while now, what you have to do is clear the structure. I repeat when you have systems in place that allow you to audit, connect with your suppliers and be able to do audits. on the lineIt is software of 30 million dollars, but it is in the budget and the IDB gets credit for it… (I)