And why wouldn't we want to be a fucked over as the Chileans?
http://www.nytimes.com/2006/01/10/international/americas/10chile.html?pagewanted=1
SANTIAGO, Chile, Jan. 9 - Michelle Bachelet is a pediatrician and a
Socialist, while Sebastián Piñera is a billionaire businessman and a
conservative. They may agree on little as the opposing candidates in
Chile's election for president, but they concur on one important
point: the country's much vaunted and much copied privatized pension
system needs immediate repair.
The Chilean system of personalized accounts managed by private funds
has inspired a score of other countries since the pioneer effort to
create it here 25 years ago. It is endorsed by President Bush, who has
called it "a great example" from which the United States can "take
some lessons." Here at home, though, dissatisfaction with the system
has emerged as one of the hot-button issues in the election, a runoff
that will take place on Sunday.
"Most people perceive the costs of pensions and the pensions
themselves as unfair," said Patricio Navia, a political science
professor at New York University and at Diego Portales University
here. "Many of those who started work when the system was first
adopted are realizing that they have not been able to contribute
enough to get a significant pension," Mr. Navia said, adding that they
resent "overhead costs that are so high" and that have led to record
profits for the pension funds that manage contributions automatically
deducted from workers' paychecks.
Ms. Bachelet, the front-runner in the race, has described the pension
system as being "in crisis" and has vowed to take steps to fix it.
Among the ideas being considered in her camp are increasing and
expanding the minimum pension, as well as measures to allow individual
contributors to "bundle" together into larger groups so as to be able
to negotiate better terms with pension funds.
"There are two big issues, coverage and costs," Andrés Velasco, Ms.
Bachelet's economic adviser, said in an interview here. "Too many
people are outside the system," he said, adding that too many of those
in the system have found that "saving via the pension funds is quite
expensive."
According to a recent study here, Chile's pension funds, whose number
has shrunk to 6 from more than 20 as competition has diminished,
recorded an average annual profitability of more than 50 percent
during a recent five-year period. Other studies, including one
conducted by the World Bank, indicate that pension funds retain
between a quarter and a third of workers' contributions in the form of
commissions, insurance and other administrative fees.
At the moment, the government pays about 5 percent of gross domestic
product, or more than it spends for either health or education, on
pensions for the poor, payments into a separate military retirement
plan and so-called transition and administrative costs. Supporters of
the privatized system argue that the state's burden will diminish as
older retirees enrolled in the pay-as-you-go system that prevailed
here before 1981 gradually die off.
But skeptics point to another developing problem: many young people,
who should be enrolling in the system early to accrue maximum benefit,
are staying out or paying in very little. Some cannot afford to
contribute beyond the obligatory minimum payment, which is 10 percent
of wages, while others are either self-employed or have been hired by
companies as low-paid independent contract workers and therefore do
not have to contribute at all.
"The bottom line is that this system does not work with this labor
market," said Andras Uthoff, an economist who is director of the
social development division of the United Nations Economic Commission
for Latin America here. If trends continue, he added, "only a small
percentage of people are going to be able to finance meaningful
pensions. What happens then to the rest?"
As a result of such doubts, attacking the pension system and
especially the perceived excesses of the funds has become a surefire
source of votes. One of the big winners in the first round of the
election last month, for example, was Guido Girardi, a senator-elect
and Bachelet supporter who has taken upon himself the role of scourge
of the private management funds.
"I am going to do away with these thieves in jackets and ties," Mr.
Girardi vowed. "We are going to defend the citizenry from these funds
that rob people of their pensions."
But even advocates of an untrammeled free market, like Mr. Piñera, the
conservative candidate, are jumping in with criticisms, to the
surprise of some here. Mr. Piñera is the brother of José Piñera, the
former labor minister who imposed the personal account system during
the dictatorship of Gen. Augusto Pinochet. In addition, Sebastián
Piñera is backed by the large business groups that control the pension
funds and have benefited from the expansion of investment capital the
funds have provided.
Chile's social security system requires deep reforms in all sectors,
because half of Chileans have no pension coverage, and of those who
do, 40 percent are going to find it hard to reach the minimum level,"
Mr. Piñera said in a televised debate with Ms. Bachelet on Wednesday.
"This has to be confronted now, and we agree with Michelle Bachelet
and will, I hope, join forces behind this large undertaking."
One of the changes Mr. Piñera has proposed is a guaranteed pension for
housewives, which the Bachelet camp dismisses as populist posturing
that will add to government expenditures. He also favors financial
incentives to the poor, like matching government contributions, to
encourage them to participate in the system; more bargaining power for
consumers; and increased competition among the funds to force them to
bring down their fees.
"We don't want to dismantle the system; we just want to improve it,"
said Felipe Larraín, Mr. Piñera's chief economic adviser. But
"pensions are very low," he acknowledged, and reform is "not just an
issue of fixing the pension fund management system, because there are
also people who cannot get an adequate pension" based on the
contributions they are making.
José Piñera, who is co-chairman of the Project on Social Security
Choice at the conservative Cato Institute, based in Washington, did
not respond to e-mail requests for an interview to discuss the changes
being proposed here. But his Web site reprinted a recent article in
the conservative daily newspaper El Mercurio here that criticized the
changes proposed by both candidates as "demagoguery."
Officials in the Bachelet campaign said Ms. Bachelet had already
decided to appoint a commission to examine the social security system
and recommend changes if she is elected. They predicted that
legislation to overhaul the system would be presented to Congress
within six months of her taking office in March.
"It's a big reform, not just patching a few things up," Mr. Velasco
said. While the rest of the world is still enamored of the original
Chilean model, he noted, "we are moving to a Chile II model, and there
is no blueprint for us to follow. We have to create from scratch."
-----
Yang
a.a. #28
AthD (h.c.) conferred by the regents of the LCL
a.a. pastor #-273.15, the most frigid church of Celcius nee Kelvin
EAC Econometric Forecast and Sorcery Division
Proudly plonked by Lani Girl and Crazyalec (aka aka Yang's little poltregeist *****)
The Bush 'balanced' budget: 1.6 trillion and worsening
The Bush 'economic' policy: 12.5 million FEWER jobs than Clinton and counting
The Bush Iraq lie: -2209 GIs, one friend's co-worker's son and mounting
Having Bush ***** up my country: Worthless
-----
"Now, did I want to go? Hell no."
-duke (duckgumbo32@cox.net), aka PedophilEarl J Weber, 63
year old mateless, heirless biological failure
of Afton Oaks Apartment, Baton Rouge, on why
a Neocon chickenhawk like him pussied out of
the Vietnam War.
Contact duke's priest and ask
him why duke loves to play
with little girls' nipples:
http://www.stpatrickbr.org/
Father Gerard "Jerry" Martin
Saint Patrick Catholic Church
12424 Brogdon Lane
Baton Rouge, Louisiana 70816
.
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