Tuesday, January 10, 2006

John Tierney, raving about the privatized Chilean social security system in The New York Times, April 26, 2005:

... if you contribute for at least 20 years, Chile guarantees you a minimum pension that, relative to the median salary, is actually more generous than the median Social Security check.

..."I'm very happy with my account," [my Chilean friend Pablo] said to me after comparing our pensions. He was kind enough not to gloat....

John Tierney, still raving about the privatized Chilean social security system in The New York Times, May 7, 2005:

I can't protect my pension against political risk, but Pablo can help protect his against the risks of the stock market. As he approaches retirement, he can gradually shift his money out of stocks and into bonds, like the ones that financed the private road between Santiago and the port city of Valparaiso, which will be paid off by tolls.

... My pension depends on 535 politicians who will be asked to vote for steep tax increases or budget cuts that they fear could cost them their jobs. Pablo's pension depends on people driving between Chile's two largest cities.

John Tierney, still raving about the privatized Chilean social security system in The New York Times, June 14, 2005:

[Chile's] pension system has a stronger safety net for the older poor than America's (relative to each country's wages) and more incentives for people to work, because Chileans' contributions go directly into their own private accounts instead of a common pool like Social Security....


The New York Times today:

... "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," [Chilean political science professor Patricio] 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.

...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.

... 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....

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 ... 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."...

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