Pensions and the battle of ideas

To ensure your the goal of generalizing the pension model based on individual accounts and private management of pension funds, the economically dominant sector tries to establish their ideological hegemony in the matter of social security. For this, they try to sell the idea that their position represents the general interest of society, since it is the only one that common sense can qualify as appropriate and sustainable.

In this route recently, as can be See in the article published in the newspaper La Prensa entitled Is IVM solidary? February 3, 2023?, it is claimed that the defined pension model, that is, what we know as the solidarity system, is not actually solidarity. As an alternative, they present a three-pillar model, the two core of which are based on individual accounts.

Individual account models, that is defined contribution, are characterized for the reason that the risks faced by the insured are considered strictly individual, so that they cannot be faced jointly among the insured. These are significant risks.

An example of this is that any drop in the price on the financial markets of securities in which the insured’s funds are invested will mean a loss for them. The following example gave Isabel Ortiz gives us an idea of ​​the magnitude of these possible losses: “In Peru, during the global financial crisis of 2008-2009, pension fund assets were reduced by 50 percent or more, due to the fact that AFP portfolio managers they invested in high-risk instruments, even more than those taken by participants in the Peruvian stock market.”

Individual accounts are also known to generate miserable pensions. An example of that is is in the amount of pensions those listed in the Chilean system of individual accounts. In this case, contributors between the ages of 25 and 33 receive a pension of only 25.0% of their last salary if they are men and 19.0% if they are women. Bad business for policyholders ia good deal for financial capital.

Spokespersons of CONEP could claim that they propose a pillar of non-contributory pensions for those who cannot retire with personal accounts. This is a cynical position, designed to promote self-interest.

To begin with, it is a pension with a practically ridiculous amount of 125.0 B/ at the age of 65, which is not even close to the real cost of a complete basic family basket. Worse still, these pensions would be funded by central government funds in a country where employers have the luxury of maintaining a 10.0% tax evasion Internal product Gross, avoiding submission of quotas to CSS approximately 27 out of every 100 workers in their companies.

They suggest practicing what Stiglitz calls the socialism of the rich: retain benefits and socialize costs.

The solidarity system is based, on the contrary, on an intergenerational chain of solidarity in which those who are active workers are in solidarity with those who are no longer, recognizing that it was the latter who developed the productive forces and social conditions, including Channel recovery, which enable the income of current employees. It is important, therefore, to face it the battle of ideas, positions and claims economically dominant sectors.