Proposal of the president of the IESS on raising the age for retirement, without the support of experts

Raise the retirement age, adjust the pension calculation formula, allow for a personal account for members who want to contribute more and improve their retirement, and that the State’s contribution to the IESS based on GDP are the four key points of a reform that the president of the Ecuadorian Social Security Institute (IESS), Francisco Cepeda, poses as a way out of the crisis of the organism. All of this would be part of a regulatory proposal that he would present to the Executive in March or April and that he is willing to discuss with the interested sectors. The statements he made to digital media First fruits These days they already generate several reactions.

The proposal does not convince various sectors. One of the arguments is that the affiliate should not be made to ‘pay the piper’ by the mismanagement of the IESS. On the other hand, the change in age and calculations they are not a definitive and integral solution if the main problems (excess of expenses compared to income, low coverage, corruption) are still present.

IESS clarifies that proposals for reforms to Social Security will be agreed upon by citizens

For Henry Llanes, vice-president of the Association of affiliates, retirees and pensioners of the IESS, the announcements made by Cepeda are not a solution and would rather create a problem for the institution and the affiliates. Thus, according to Llanes, raising the age, adjusting the pension calculation, or any other measure, can only be decided “once the house is in order.”

peasant insurance

Only then can it be seen whether such measures are justified or not. According to Llanes, putting the house in order means making a administrative and financial reform, starting with the corporate governance of the IESS, which must be run by members and retirees. It will be the new corporate government that decides on sensitive issues such as separating the Peasant Social Security (SSC) from the General Security. The idea is that the SSC is managed independently with a subsidy from the State.

What is the difference between voluntary affiliation and regular or dependency relationship?

He explained, for example, that with $2 a month the farmer and his family are served, and they can even access a $100 pension. The problem of beneficiaries who, without being affiliated or without paying resources, attend the IESS must also be resolved. This is in reference to children under the age of 18 of affiliates.

banking services

Another measure that could be positive for the sustainability of the IESS, Llanes said, is that the Biess becomes first-tier banking, and can generate banking services. A bank is a profitable business, he says.

For Llanes it is an abuse on the part of the Government to want to continue maintaining the situation of the IESS as it is and to put more pressure on the affiliates, since this means charging them with the responsibility of financing social and health policies. Llanes explained that at the moment in the National Electoral Council (CNE) the request has been presented to consult the citizens about a new formation of the IESS Council (two members, a retiree, an employer and a representative of the Government from the Ministry of Labor ).

On the subject of 40%, which the Government must currently deliver, but is not complying with in a timely manner, Llanes said that if the IESS is left without the Peasant Insurance and there are administrative and financial reforms, it will surely not require that contribution and could manage itself.

short term solution

Meanwhile, according to Alberto Acosta Burneo, editor of Weekly Analysis, The reforms proposed by the president of the IESS can help improve the IESS accounts temporarily, but they are not a definitive solution. What must exist is a reform comprehensive which should have at least two major objectives. In the first place, go towards an integral construction of a Universal System of Social Security, because currently the IESS only covers three out of every ten people who work, since it only covers those who have a suitable job. In turn, the system consumes fiscal resources from all Ecuadorians. In addition, the costs of the services provided by the IESS must be established and related to the contributions and consumption of public resources. Additionally, the possibility of creating private accounts or individual accounts must be opened, and that members can decide to invest in private capitalization funds or in the IESS itself. There will also be a basic solidarity level where all people are financed.

Years of service

In any case, consider that the subject of age must be discussed, since people are living longer and therefore they contribute a percentage that later turns out to be minimal compared to the years of coverage they have. A value must also be placed on the services for non-affiliates and it must be optional to pay this value if you want to enjoy the IESS service, for example, for children under 18 years of age.

For Acosta, if there is no solution to the issue of Social Security, the situation will continue to put pressure on the State’s accounts and the entity itself will implode with worse services and eating up saved funds. The options should be exposed to the population in a popular consultation and citizens must understand that “it is an underfunded entity that requires a structural reform,” he added.

For his part, the constitutionalist Carlos Estarellas considers that the mismanagement of the IESS has caused the institution to be in a bad situation and poor service. He believes that they should not be punished or charged with the members for the inability of their administrators. In this sense, he maintains that the solutions could be on the side of sanctioning those responsible, those who used the IESS money politically, those who used it as petty cash. Yes, a restructuring of the entity must be carried out, but what the State owes to the IESS must be canceled. In addition, honest administrations must be established, a restriction to bureaucracy and politicizationwhile maintaining technical management.

Although he recognizes that people now live longer, he considers that not all reach their last years in good health and that They have the right to enjoy their retirement. On the issue of the children of members who are cared for by the entity, without financing, Estarellas said that it is necessary to review it. However, he assured that the IESS must improve services, so that people have an incentive to join and pay for such services. (I)