The AFPs are the private companies that manage the workers' savings for pension payments. They "manage" in the sense that they try to increase those savings while at the same turning in a profit.
Any Chilean working under an employment contract knows that 10% of their monthly salary goes to an AFP, every month. The law says so and there is nothing they can do about it. And they know that in most cases a worker can not receive pension payments from an AFP before they reach the age of retirement, which for men is 65 years of age and 60 for women.
And any Chilean has heard the rumor that after they retire they are going to get a pension that is going to be far below, way far below, their last paycheck as an employed worker.
And that's something that scares everyone.
Enter the "No more AFP" movement. The movement staged its fourth rally the Sunday before last, March 26 (See our article). They claim that 2 million people took to the streets on that day all over the country ---that is approximately 11% of the Chilean population, a lot of people.
In their website, they say that AFPs pay a third of your last paycheck, that in all developed countries and in almost all OECD countries (Chile is an OECD member) people get on average 70% of their last paycheck for pension, that in those countries pensions are handled by State-run entities, and that in those countries private companies are only supplementary to the State-run entities and do not replace them (in Chile there are no State-run entities).
For all those reasons, the "No more AFP" movement wants to give AFPs a one way ticket to hell.
However, most experts say that is not likely to happen. What did happen, though, is that they got everybody talking about the AFPs, and often in a bad way.
In fact, the movement's impact has been so huge that now, for the first time since the inceptions of AFPs 37 years ago, a major proposal has been floated to change the system, and everyone seems to agree on it: increase by 5% the mandatory statutory 10%.
Big question: Who is going to pay for that additional 5%? The worker? The employer? The Chilean State? A combination of the 3?
Another big question: Who is going to manage the additional 5%? The AFPs? A State-run entity? Something in between?
Still another big question: Who is going to implement the additional 5%? The current administration of President Bachelet, now into its final months, or the next administration, yet to be elected?
No consensus has been reached so far on the answers to those big questions.
With widespread dissatisfaction with them fueled by the "No more AFPs" movement, AFPs are now sailing in rough waters.
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