Chile’s retirement income system comprises means-tested social assistance; a mandatory privatelymanaged defined contribution system based on employee contributions with individual accounts managed by a small number of Administradoras de Fondos de Pensiones (AFPs); and a framework for supplementary plans sponsored by employers (the APVC schemes).
The overall index value for the Chilean system could be increased by:
- raising the level of mandatory contributions to increase the net replacement rate
- raising the level of household savings
- increasing retirement ages for both men and women
- continuing to review the minimum pension for the poorest pensioners
The Chilean index value fell from 69.1 in 2015 to 66.4 in 2016 primarily due to a reduction in the net replacement rate.