The ‘Chilean Model’ was enacted by decree in the early 1980’s, during the military dictatorship of Gen. Augusto Pinochet, to replace a Pay-As-You-Go public pension system (the sort of thing that has Rick Perry calling Social Security a “Ponzi scheme.”)
However, despite the regime that originally imposed it, the overall system has ultimately met with at least some approval from the Chilean people, though it is far from perfect and remains a work in progress. Therefore, the Chilean system does merit at least a close examination on its own merits. But as it turns out, Herman Cain and his fellow Tea Partiers might not like what they find.
In short, the “Chilean Model” so touted by Cain is the individual mandate. What “Obamneycare” is to health care, Chile’s pensions system is to Social Security, with a system of mandates, regulation and subsidies.
Under the Chilean system, workers must contribute 10% of their income, up to a certain limit — similar to Social Security taxes in this country — to a private pension fund administrator (the different funds are known by the Spanish initials “AFP,” for Administradoras de Fondos de Pensiones). As a 2001 OECD report makes clear, the Chilean Model actually does involve a significant amount of government regulation on AFP’s, in order to contain risks and ensure stability.
Huh. Imagine that - a pension fund needing government regulation. Damn government, mucking up Herman Cain’s talking points.
not at all related to the post but NO MORE TAGS AUTOMATICALLY INCLUDED IN REBLOGS AWWW YEAHHH
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