Michele Bachelet

SANTIAGO, Chile (WOMENSENEWS)–Chilean women have been applying in higher-than-expected numbers to the new public pension benefits that President Michelle Bachelet announced last March as the major fulfillment of her campaign commitment to improve women’s financial security.

At the time, Bachelet predicted that women would represent 60 percent of applicants for so-called solidarity pensions that pay a little less than $100 a month to those over 65.

But between July, when implementation began, and November, nearly 80 percent of those applying for public assistance payments have been women.

Additionally, starting in July 2009, all women 65 or older will receive a pension bonus for each living child they have.

"Chile’s pension reform stands out because gender issues represent one of the fundamental pillars of the plan," Fabio Bertranou, a senior social security specialist with the International Labor Organization in Chile, said in an interview with Women’s eNews.

Eliana Gonzalez, a 67-year-old housewife who is receiving the solidarity pension, hails the reform. "Normally if my husband died, then my income would have been greatly reduced. This is the greatest thing that Bachelet could have done."

Some women’s rights activists and trade groups consider the payments under the solidarity pension too meager and are pressing for a base solidarity pension of at least $135 per month.

Nelly Fuentes, a 49-year-old domestic assistant, says women need to be eligible sooner. "Women should start to receive benefits at 60 years of age, instead of 65," she said.

Women Retire at 60

Chile has a lower compulsory retirement age for women; 60 versus 65 for men. So far, however, criticism by advocacy groups and female citizens has mostly focused on the payout amounts, not the gender gap in the retirement age.

Maria Lenina del Canto, a coordinator at the nongovernmental group Movement for the Emancipation of Chilean Women, based in Santiago, calls the solidarity pension a very important achievement for women without a history of paid employment. "I am normally critical of the government, but this is great," she said.

In the case of divorce, the new pension law allows women to go before a judge and request up to 50 percent of their husband’s pension, public or private, even if they never contributed to the country’s pension fund system. The rule applies to divorce cases started after Oct. 1, 2008, and leaves judges in charge of the outcome.

The private fund system was established in 1981 under the dictatorship of Gen. Augusto Pinochet, ousted in 1988 by a plebiscite.

As of 2006 the private funds provided retirement financing to about 16 percent of the elderly population here.

The pension benefits are designed to reach about 60 percent of Chile’s senior citizens, Mario Ossandon, undersecretary for social protection, told Women’s eNews in a recent interview.

Homemakers Take Headline Role

This includes citizens without any earnings history, among whom homemakers have been playing a headline role since the announcement of the pension changes. Chile’s Pension Regulatory Agency estimates that the privatized pension system has far more male contributors and beneficiaries, with 2.4 million men contributing compared to 1.5 million women.

Many female contributors’ private pension accounts are curtailed by maternity leave and time off for child-rearing. The time period that women pay into their funds amounts to 43 percent of their working lives on average, according to statistics from Chile’s Ministry of Labor and Social Protection.

The overhauled pension system also covers the roughly 150,000 Chileans who, as of 2006, had deposited funds in a previous pay-as-you-go system but did not switch to the privatized pension system established in 1981.

The pension law changes also extend to people whose private pension accounts did not provide a significant pension and replaces a state-funded public assistance program that ran in tandem with the privatized funds.

The previous assistance program provided monthly subsidies of $76, for the poorest 20 percent of the elderly population. But municipal governments distributed the funds and, often, poorer districts did not have enough money to meet demand.

The Chilean government also offers senior citizens a range of subsidies on essentials such as electricity, water and health care. The federally funded solidarity pensions are intended to complement those subsidies and extend the reach of Chile’s social safety net and are guaranteed to every applicant that meets the prerequisites.

Funded by Copper Boom

The new pension benefits are being funded largely by surplus funds saved during years of economic growth. Chile, which is the world’s largest copper producer, benefited from the commodity boom earlier this decade. The country posted an 8.7 percent budget surplus in 2007 and has stowed away $22 billion in windfall copper profits before a recent dip in prices.

Despite the global economic downturn and retreat by financial markets, the International Labor Organization’s Bertranou says the government’s reserves will be able to sustain the new pension law’s annual $2 billion cost, which is roughly 1 percent of Chile’s total economic output.

A 2006 government population study found that 7.6 percent of women 60 or older are considered either poor or indigent, compared to 7.4 percent of men.

But the pension changes, including the solidarity pension, benefit women disproportionately because of women’s longer average life expectancy; currently 80 years compared to 73 for a man. Those averages are expected to reach 83 and 77 by 2020.

To publicize the changes, Chile has been conducting town-hall-style community forums, advertisements on radio and television, and funding to nongovernmental groups to help the outreach.

The Ministry of Labor and Social Protection estimates that more than 600,000 senior citizens have begun receiving benefits under the solidarity pensions so far.

Matt Malinowski is a reporter for Business News Americas. His freelance articles have appeared in Women’s eNews, Christian Science Monitor, San Francisco Chronicle and EcoAmericas.