Observation (CEACR) - adopted 1990, published 77th ILC session (1990)

The Committee takes note of the information provided by the Government in its report for the period 1988-1989; it also takes note of the statistical information.

1. Article 9, paragraph 1 of the Convention. In reply to the Committee's comments, the Government reiterates that the monthly contributions for funding future pensions are wholly the property of the workers and that there is a one-to-one ratio between the amount deducted by the employer from each worker for insurance and the funds accumulated by that worker. At the same time, as the amount deducted depends on the worker's remuneration which is negotiated either individually or collectively with the employer, the latter makes a direct contribution to the constitution of the worker's pension fund, since, when the remuneration is fixed, the employer always takes into account the total costs related to labour. Thus, regardless of whether the contributions are paid by the workers or the employer, a balance will always be reached in accordance with the total amount that each enterprise is able to pay. Therefore, in a system of this kind the source of the contributions (whether coming from the worker's remuneration or the employer's contribution) is irrelevant, since in any event the original source is always the enterprise. Without prejudice to the foregoing, the Government is currently working on a Bill to create the Employer's Bonus, which is negotiable and whose purpose is to increase the worker's insurance assets enabling him to have access to early retirement or increase the amount of his pension. The bonus will not be subject to tax or deductions for insurance and will not have maximum or minimum limits. In this way, workers and employers will be able to prepare pension plans which may be increased, in the case of younger workers, by means of periodical deposits in their individual capital accounts or, in the case of workers who are closer to retirement age, by means of a lump sum deposit. With such a mechanism, the employers' contribution to the resources of the workers' pension funds will exceed their obligation to participate by means of contributions deducted from remuneration.

The Committee takes note of the Government's statement. In particular, it notes with interest the above-mentioned Bill and asks the Government to provide a copy of it. The Committee must stress, however, that in order for full effect to be given to this provision of the Convention, and to ensure the application of the principle of solidarity embodied in social security schemes, employers should contribute directly to the financial resources of compulsory insurance schemes for employees. In fact, when an employer pays the salary to workers, he or she is not necessarily covering the social security contributions. The Committee, therefore, hopes that the Government will adopt the necessary measure to give effect to the recommendations made by the committee set up by the Governing Body to examine the representation made by the National Trade Union Co-ordinating Council of Chile (CNS), under article 24 of the Constitution, alleging the non-application by Chile of, inter alia, Convention No. 35 (see document GB.234/23/28, 234th Session, November 1986).

2. Article 9, paragraph 4. In reply to the Committee's previous comments, the Government again refers to the various ways in which the State contributes to the financial resources of the insurance scheme. In this connection, it indicates that resources are allocated in such a way as to assist the most needy in the most effective way possible. Under this scheme, workers affiliated to the capital accumulation system are guaranteed minimum old-age, invalidity and survivors' benefits. Thus, the State allocates its resources to those workers who, because their earnings during their working life were low or because they have not contributed for a period of over 20 years, are unable to finance at least a minimum old-age pension from their assets in the individual capital accumulation system. With such a mechanism, the State is taking an active position with regard to its contribution to the financial resources of the pension funds of workers who are really in need, thereby maintaining an adequate policy of income redistribution. Thus, direct participation by the State during the active life of the worker is unnecessary, as it would not be sufficiently profitable to justify public funds being allocated to persons who are not really in need.

The Committee takes note of the information supplied by the Government. However, it cannot but refer to the conclusions of the Committee set up by the Governing Body, that "although the present legislation provides for the possibility of some financial participation by the State in the form of a guarantee, this participation, given its conditional and thereby exceptional nature, does not strictly correspond to the contribution to the financial resources or benefits of insurance schemes" prescribed by the Convention. Consequently, the Committee again expresses the hope that the Government will adopt the necessary measures to give full effect to this provision of the Convention.

3. Article 10, paragraphs 1 and 2. In reply to the Committee's previous comments, the Government indicates that the Chilean Social Insurance System fully complies with these provisions of the Convention, since the law gives broad scope for any worker concerned, or group, to found a Pension Fund Administration (AFP), and establishes the AFP Supervisory Body. In addition, the Government again refers to the facilities provided for groups of workers to form their own AFPs and states the names of those that already exist, their composition and the role and participation of the workers in them. The Committee again takes note of this information. However, it observes that no new AFPs have been created and that the Government has not provided a copy of the statutes of the AFP FUTURO, requested previously. In the circumstances, the Committee reiterates its request and asks the Government to continue to provide information on the establishment of new occupational AFPs. Lastly, it recalls once again the recommendations of the Committee set up by the Governing Body, that the Government should adopt appropriate measures to amend Legislative Decree No. 3500 to ensure that the insurance scheme is administered by non-profit-making institutions, as prescribed by these provisions of the Convention, except in cases where the administration of the scheme is entrusted to institutions founded on the initiative of the parties concerned or of their organisations and duly approved by the public authorities.

4. Article 10, paragraph 4. In reply to the Committee's previous comments, the Government again states that the workers participate actively in the administration of the system. In this connection, it refers again to the seven Pension Fund Administrations (AFPs) in which the workers have part or total ownership and are represented on the board. The Government indicates that workers also participate by choosing freely the AFP which will administer their insurance funds, in accordance with the law, which grants this right to all those affiliated to the system. Furthermore, a worker affiliated to a given AFP may transfer at no cost to another AFP when and as many times as he so wishes, according to the one most suited to his needs or in which he feels he is best represented, and he may be an active or passive, employed or self-employed member. This active participation by workers has been witnessed on various occasions, when workers or groups of workers have manifested their discontent over some specific action on the part of an AFP, and have withdrawn their funds and placed them with another AFP. The wide personal and active involvement of workers in the administration of their funds and the selection of their representatives is the basis of the Chilean insurance system.

The Committee takes note of this information. However, it must refer once again to the conclusions of the committee set up by the Governing Body, to the effect that "the participation of insured persons in the management of the AFPs results neither from the current legislation nor from the statutes of these limited liability companies, which make no reference to them nor to any occupational organisations ... even if insured persons do in fact participate to some extent in the management of some AFPs, there remains the question of the participation of insured persons in the management of the remaining AFPs".

Accordingly, the Committee again expresses the hope that the Government will give effect to the recommendations of the above-mentioned committee, and will adopt the necessary measures to ensure that the representatives of insured persons participate in the administration of all insurance institutions under conditions determined by national legislation in accordance with the provisions of the Convention.

5. With regard to its previous comments concerning the lack of participation of insured persons in the administration of the institutions of the old system, the Committee takes note of the information supplied by the Government, to the effect that, although the attributions of the administrative boards have, for the time being, been conferred on the Director of the Institute for the Standardisation of Insurance Schemes by section 6 of Legislative Decree No. 3502 of 1980, or on the persons responsible for those bodies which have not yet merged with the above Institute, according to the provisions of section 71 of Act No. 18768 this is a temporary system which is gradually being replaced by the new pensions system established by Legislative Decree No. 3500 of 1980. [The Government is asked to report in detail for the period ending 30 June 1990.]