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Pension Reform: Government freezes the processing of the project until after the constitutional plebiscite https://www-latercera-com.translate.goog/pulso/noticia/reforma-previsional-gobierno-congela-la-tramitacion-del-proyecto-hasta-despues-del-plebiscito-constitucional/IO7ZFLNJLBBJBPDXAOFZ36XHNY/?_x_tr_sl=es&_x_tr_tl=en&_x_tr_hl=en-US&_x_tr_pto=wapp

The Doctor
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Pension reform: Government freezes the processing of the project until after the constitutional plebiscite
by Mariana Marusic

Picture: The Minister of Finance, Mario Marcel; President Boric and the head of Labor, Jeannette Jara.

They project that if the proposal for a new Constitution is rejected, the reform may gain strength; But if the text is approved, political conversations would become more complex. In addition, the Ministry of Labor commissioned a legal study to analyze what the draft of the Constitutional Council says on social security and determine whether contributions can be allocated to solidarity. Constitutionalists are divided.
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Until a few months ago, the pension reform monopolized the political discussion, between negotiations and statements by parliamentarians and the government. Although it is one of the main projects that President Gabriel Boric wants to carry out during his mandate, today it is on pause and everything indicates that the Executive has put it in the freezer for a long time.

After the National Holidays, the last public activity for pension reform occurred, when the Minister of Labor, Jeannette Jara, made a tour in the northern part of the country called “better pensions for Chile”, which unleashed an attack from the opposition. who accused the Secretary of State of “wasting public resources” and promoting a project that is not yet law.

Since then there have been no more calls from the government on the project, with the exception of one that occurred at the beginning of October, when the group of PPD and independent deputies delivered a pension proposal to Minister Jara.

And the legislative deadlines have not been met either. Despite the fact that the head of Labor assured at the beginning of September that the indications of the project would be entered at the end of that month in the Labor Commission of the Chamber of Deputies, with the aim of dispatching the project from the Chamber of Deputies between October and mid of November. But that didn't happen anymore.

And something more recent: President Boric said a couple of days ago that he hopes that in the coming weeks the indications for the pension reform will be entered, and that he aspires to achieve a broad agreement on this matter. That deadline will not be met either.

No one has said it publicly, but the government's decision now is to wait until after the constitutional plebiscite on December 17 to reactivate the pension reform, as confirmed by various Executive sources. The Boric administration estimates that if the proposal for a new Constitution is rejected, the pension reform may gain strength. On the other hand, if the text is approved, the political process would become more complex.

Although no one from the opposition reaffirms this point, in reserve they do point out that an approval of the new Magna Carta does not play politically in the government's favor; and if not, they believe they would win.

Senator Rodrigo Galilea, president of RN, maintains: “In my opinion, the strength or otherwise of a possible pension reform depends on the quality of the proposals and not on the approval of a new Constitution.” Representative Benjamín Moreno, head of the Republican Party, comments that “Chileans want to be owners of their savings, but it is difficult to believe that this government aspires to the same thing, and people know it. The loss of force of the pension reform is a product of this bad government, regardless of whether the Constitution is approved or not.”

But there is an additional ingredient that the government is considering if the new Constitution is approved, and it is regarding the content of the text that will be voted on in December. What the draft says about the right to social security is already ready and will not undergo new changes, given that the Expert Commission did not make observations in that section. In the opinion of some constitutionalists, what was approved on this issue by the Constitutional Council casts doubt on whether pension contributions can be allocated for solidarity, which is what the government seeks to do with at least four points of the six extras that the project includes. but there is no single vision on the matter.

According to the first look that the Executive has taken at the content of the preliminary project, they estimate that there are no obstacles to moving forward with its reform. Thus, if the new Constitution is approved, they see that the big issue could be more political. From the right they advance that they will insist more strongly, if the new text is approved, that solidarity must be done with general taxes and not with contributions.

But in any case, as the government projects that legally what is proposed will be subject to interpretations, they believe that it is too early to make definitions. This is why the Ministry of Labor has already commissioned a legal study from a constitutional expert to have an external and independent source on the scope of what the new Magna Carta proposes regarding social security.

Even though this report is still being developed, they insist that in principle the text should not prevent solidarity through contributions. However, what they are evaluating is whether they should phrase the instructions differently to achieve the same objective: that at least 4% of the additional contribution be allocated to solidarity. Although this figure could be reduced further during the negotiation, for the government one of the main objectives of the reform is to be able to create solidarity in the contributory pillar.

So, that is also the reason for the decision to postpone the reactivation of the project, since - it is argued within the Executive - it would be difficult to write the instructions when it is not clear how the marking of the pension field will be. Thus, from that perspective, it is likely that the processing of the pension reform will be resumed next year, and there are those who do not even rule out that it will not be until March.

The new Constitution and the experts

What the draft of the new Constitution on social security says, and which calls into question whether contributions can be allocated for solidarity, is that “each person will have ownership over their pension contributions for old age and the savings generated by them, and will have the right to freely choose the institution, state or private, that manages and invests them. In no case may they be expropriated or appropriated by the State through any mechanism.”

In this regard, the professor of Constitutional Law at the UC, Arturo Fermandois, believes that solidarity can be achieved, under certain conditions. “First of all, the fact that ownership of the contributions is guaranteed does not mean that these contributions all fall into the same bag with respect to their legal nature. Contributions that are deducted or deducted from the worker's remuneration are subject to strict ownership; But the contributions that are imposed at the expense of the employer actually have the constitutional nature of a tribute, a true tax on work. An affectation tax. And I have maintained that, with respect to this part of the contributions, there is more room for the law if it wants to impose reasonable limitations on the worker's ownership of them. Reasonable, justified, proportionate,” he states.