Observation (CEACR) - adopted 1993, published 80th ILC session (1993)

The Committee notes the information supplied by the Government in its report, and of the discussions which took place at the Conference Committee in 1992.

1. Article 9, paragraph 1, of the Convention. In reply to the Committee's previous comments on this provision of the Convention which requires employers to share in providing the financial resources of the insurance scheme, the Government again indicates that the Individual Capital Accumulation Pension System, established by Legislative Decree No. 3500 of 1980, did not envisage any compulsory contribution by employers to the worker's Pension Fund, since that Fund is constituted by the worker himself with the compulsory contribution which his employer deducts from his wages every month, with such contributions as the worker may pay voluntarily into his individual capital accumulation account, and with such voluntary deposits as the worker may make as savings in what is termed a voluntary savings account. Furthermore, Legislative Decree No. 3500, section 18, provides for a voluntary contribution by employers to the constitution of the Fund's resources in the form of "Agreed Deposits" consisting of such sum or sums which they deposit in agreement with the workers, individually or collectively, in the individual capital accumulation account. Lastly, the Government reiterates that to specify who bears the costs serves no purpose since, in wage negotiations, the employer always takes account of the gross wage and the worker, the net wage, and that the problem is therefore only one of accounting.

The Committee takes note of this information. However, it observes once again that section 18 of Legislative Decree No. 3500 of 1980, as amended by Act No. 18964 of 1990, cannot be regarded as establishing a contribution by employers to the financial resources of the compulsory insurance scheme within the meaning of Article 9, paragraph 1, of the Convention, in as much as this merely tends to be a possible supplementary contribution upon which the worker may agree with his employer without there being any legal obligation on the employer to bear the cost. Consequently, the Committee once again expresses the hope that the Government will adopt the necessary measures to give effect to the recommendations of the Committee set up by the Governing Body to examine the representation submitted by the National Trade Union Coordinating Council (CNS) of Chile, under article 24 of the Constitution, alleging non-observance by Chile of, inter alia, Convention No. 35 (see document GB.234/23/28, 234th Session, 17-21 November 1986).

2. Article 9, paragraph 4. In response to the Committee's previous comments concerning the financial contributions of the public authorities, the Government reiterates that the State's contribution to the Fund's resources is subsidiary and is laid down in sections 73 et seq. of Legislative Decree No. 3500 of 1980 as a state guarantee in respect of minimum old-age, invalidity and survivors' benefits for those insured persons who satisfy the requirements laid down in the Decree. The reason why the State's contribution is subsidiary is that the individual capital accumulation system encourages workers to save more during their active life with a view to obtaining a higher old-age pension. Consequently, the Committee is bound once again to 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. 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 response to the Committee's previous comments, the Government reiterates in its report that the individual capital accumulation system provided for in Legislative Decree No. 3500 of 1980 entrusts the administration of the insurance scheme to institutions called "Pension Fund Administrations" (AFPs), which are limited liability companies which may be set up on the initiative of workers or their associations and it may be specified in by-laws that the profit they make shall be devoted to the grant of other social benefits to worker shareholders and their families. These institutions are entitled to payment from members, in the form of commissions. Accordingly, they are profit-making companies and were created as such, so that they would perform the task entrusted to them more effectively, and because the increased competition to attract new members would reduce the costs of their services. The Committee notes this information. However, it also notes the statement of the Government representative at the Conference Committee in 1992 that Act No. 19069 of 1981 allows trade union organizations, federations and confederations to set up their own pension fund administrations and does not require them to be limited liability companies.

In these circumstances, the Committee is bound to recall 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 their associations and duly approved by the public authorities. The Committee also asks the Government to provide the text of Act No. 19069 of 1991, together with information on any new AFPs founded by workers' organizations, including those that are not limited liability companies.

4. Article 10, paragraph 4, of the Convention. In reply to the Committee's previous comments, the Government indicates that Legislative Decree No. 3500 of 1980 does not provide for any compulsory mechanism whereby members of an AFP participate in the administration and direct management of the funds, except in the case of AFPs founded by workers. However, it does not prohibit such participation. Under the new system, there is a different form of participation whereby each worker is free to join whichever fund best suits him, either because a given fund yields greater profits than others, or because it requires lower commissions, or because it provides better services. Giving such a choice to the worker is the best form of participation in the administration of resources because it compels private companies to constantly improve their management of resources, which is to the direct benefit of members.

The Committee takes note of this information. It again refers to the conclusions of the Committee set up by the Governing Body 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 or to any occupational organizations ...". Consequently, the Committee again expresses the hope that the Government will give effect to the recommendations of the Committee referred to above, and adopt the necessary measures so that the representatives of the insured persons may participate in the management of all insurance institutions under conditions to be determined by national laws or regulations, in accordance with the provisions of the Convention.

[The Government is asked to report in detail for the period ending 30 June 1994.]