President Michelle Bachelet was in the Santiago district of Huechuraba this morning, accompanied by the Treasury Minister, Rodrigo Valdés, the Employment and Social Security Minister, Ximena Rincón, the Social Development Minister, Marcos Barraza, and the Health Minister, Carmen Castillo; to sign a bill that she had announced in her State of the Nation address in May this year. The bill will mean that those pensioners over 65 years old who currently pay 5% contributions towards their healthcare cover, will be fully exempted from this payment.
Around 600,000 senior citizens who receive the Basic Solidarity Pension or Pension Solidarity Complement are currently exempt from paying the regular healthcare contribution of 7%. Furthermore in December 2012, healthcare contributions were reduced from 7% to 5% for around 340,000 pensioners who did not qualify for the Basic Solidarity Pension or Pension Solidarity Complement but who met the following economic and residency requirements: they must be over 65 years old, have lived in Chile for at least 20 years – either continuously or in total, and for at least four of the last five years – and they must be from the 80% less affluent sectors of the population. This is the group that will be exempted from making healthcare contributions under the new law.
President Bachelet emphasized, “senior citizens are a priority for us and we will ensure their rights are guaranteed. We will be working to steadily improve their situation, so that they can enjoy a happier, more dignified retirement and be well cared for after a lifetime of work.” She added “we want every senior citizen in Chile to know that they are not alone; they have spent their whole lives working for Chile, so now Chile will look after them. Our Government is working to improve their situation.”
The bill establishes that the cost of the healthcare contributions will be reassigned to the State, so that beneficiaries will still be entitled to the same healthcare cover. Payments will be automatically transferred to the State and beneficiaries will not be required to apply for this exemption. The law will be phased in gradually, with contributions reduced from 5% to 3% in the first year and becoming fully exempt in the second year.
The bill will extend the funeral benefit to all pensioners in receipt of the Basic Solidarity Pension ( for old-age and disability) with over 8,500 points on the Social Protection Register; and to recipients of the Pension Solidarity Complement aged 65 and over with less than UF15 (US$580) in their Individual Capitalization Account (Cuenta de Capitalización Individual or CCI). In total this measure will benefit around 336,000 pensioners.
The bill also proposes a system for recipients of Solidarity Pillar disability subsidies, which will automatically make the application for either the Basic Solidarity Pension or the Pension Solidarity Complement to which they are entitled when they reach the age of 65. More than 244,000 people are expected to benefit from this change.
President Bachelet recalled that in 2008, during her first term in office, she implemented the Welfare Reform, which guaranteed solidarity pensions for the 60% least affluent Chileans, via the Basic Solidarity Pension for old-age or disability, the Pension Solidarity Complement for old-age or disability and the pension bonus for women for each child they had given birth to. Although the system currently benefits over 1.3 million people, she stressed that some aspects still need to be addressed and this is something that the Government is working on.
In this respect she highlighted the bill sent to Congress to create a State Pension Fund Administrator (AFP), which will make the private pension system more competitive and reduce costs for affiliates. She also mentioned the commission that has been set up to evaluate the problems currently affecting Chile’s pension system and propose improvements; the decision to open 15 long stay facilities and day centers for senior citizens, the first of which will be built this year in Huechuraba, La Serena, Copiapó and Temuco; the introduction of the permanent Family Complement (Aporte Familiar) in March; the increase in the number of winter bonus beneficiaries and the reinstatement of the Basic Solidarity Pension for those who lost their entitlement even though their economic or social situation had not changed.
“This is what the Government is working towards and this is why we have introduced the measures I have just mentioned and we will continue to introduce more measures, to guarantee a basic pension that will ensure no senior citizen is living in poverty or uncertainty,” the President explained.
In her closing remarks, the President appealed “for us to focus on what is important: to make progress together towards greater social protection and more opportunities for every man and woman in Chile. This bill must not be delayed by arguments that are very often contrived. Let’s make this bill a reality as soon as possible. This is what the people of Chile want, particularly our senior citizens.”