The Solidarity Pension System

A system of solidarity old-age and disability pensions is being set up, referred to hereafter as the "solidarity pension", to complement the Pension System for those workers who have not saved to finance their pensions and those whose savings turn out to be insufficient.

This solidarity system will provide basic solidarity pension benefits (PBS/BSP) for old age and disability and solidarity pension contributions (APS/SPC) for old age and disability. The Solidarity Pension System also includes cases of survivorship pensions.

These rules replace the welfare pensions and state minimum pension guarantee: mechanisms by which coverage was supplied for people unable to fund their own pensions, or where such pensions were below the level of the minimum pension.

Basic Solidarity Pension (BSP) for old age and disability
For those who are not entitled to a pension under any pension scheme and who meet certain specific requirements.

The law stipulates that the Basic Solidarity Pension (BSP) be paid to people who did not save with a view to obtaining a pension, or whose contributions were very limited during their working life.

Requirements for obtaining a BSP

Old-age

- Are 65 years of age
- Have no pension from an AFP or from the INP
- Have been resident in Chile for 20 years after the age of 20
- Have lived in Chile for 4 of the last 5 years prior to applying for the pension Are from a family belonging to the poorest 40% of the population.

Disability

- Are declared disabled by the Disability Medical Boards
- Have no pension entitlement under any social security scheme
- Are between 18 and 65 years of age
- Have lived in Chile for 5 of the last 6 years prior to applying for the pension
- Are from a family belonging to the poorest 40% of the population. OK

In order to qualify among the 40% with least resources, it is necessary to have a score equal to or less than 11,784 points on the Social Protection Record. By the year 2012, the benefit will extend to the poorest 60% of the population.

The BSP will be $60,000 as from July this year and $75,000 as from July 2009

See Savings and Pension Bulletin Nº1

Solidarity Pension Contributions (SPC) for Old Age and Disability.

Old-age SPC
For those who are entitled to one or more pensions under the terms of DL Nº3,500 and whose basic pension is below the Maximum Pension with Solidarity Contribution (MPSC).

Disability SPC
For those who have been declared disabled, who do not receive pensions from other pension schemes and whose disability pension, plus any other from the same scheme, is less than the Disability SPC.

Requirements for obtaining a SPC:

Old-age

- Are 65 years of age
- Are entitled to a certain pension in any pension scheme
- Form part of a family that falls within the poorest 40%: a percentage that will be in force for the first year of the reform's implementation
- Have been resident in Chile for 20 years after the age of 20, and 4 of the past 5 years in Chile. With 20 years' contributions to pension schemes in the country, this requirement is considered met.

Disability

- Are between 18 and 65 years of age
- Have been declared disabled by the Medical Boards of the Superintendence of Pensions
- Form part of a family that falls within the poorest 40%: a percentage that will be in force for the first year of the reform's implementation
- Provide proof of residence in Chile for 5 of the last 6 years prior to applying for the benefit
- The sum of the Disability Pension plus any other pension received from the AFP System must be less than the Basic Solidarity Disability Pension ($60,000 as from July 2008 and $75,000 as from July 2009).

The 40% level of those with least resources will apply as from July 2008. In 2009 it will rise to 45% and will reach 60% in July 2012.

See Savings and Pension Bulletin Nº2