Chilean Pension System: Benefits and Professional Implications
Pensions Under Decree Law No. 3500
The system includes the following pensions:
- Normal Old-Age Pension
- Early Old-Age Pension
- Disability Pension
- Survivor’s Pension
Normal Old-Age Pension
The Normal Old-Age Pension entitles individuals to receive a monthly amount of money after reaching the minimum retirement age (65 years for males or 60 years for females), provided they are enrolled in one of the pension schemes.
Early Old-Age Pension Explained
The Early Old-Age Pension is a benefit allowing members to retire before reaching the legal old-age retirement age, provided that, while enrolled in one of the pension schemes, they comply with the following requirements:
- Obtain a pension equal to or greater than 70% of the average income received and taxable income declared, duly updated, in the last ten years preceding the month of qualifying for the pension, and
- Obtain a pension equal to or greater than 150% of the minimum old-age pension guaranteed by the state.
Disability Pension
The Disability Pension is the right of a member not yet pensioned by the system, who, without meeting the age requirements for an Old-Age Pension, suffers a permanent impairment of their ability to work as a result of disease or weakening of their physical or intellectual faculties, and is declared invalid by the respective Medical Boards, according to the following:
- Total Disability Pension: For members with a loss of working capacity of at least two-thirds (66.6%).
- Partial Disability Pension: For members with a loss of work capacity equal to or greater than 50% and less than two-thirds (66.6%).
Survivor’s Pension
The Survivor’s Pension is a benefit provided by the system to family members of a deceased member who meet the legal requirements, including the following:
- The surviving spouse
- The children
- The parent of children of non-marital affiliation of the deceased
- In the absence of the above, the parents of the deceased.
Specific conditions apply for the inclusion of a surviving spouse (if male and not disabled) and the father of children of non-marital affiliation of the deceased. These apply only if the deceased was a woman who:
- Was receiving an old-age, early old-age, or disability pension (as of the date of declaration of invalidity) on or after October 1, 2008.
For pensions that generate survivor benefits for affiliates who die on or after October 1, 2008, the deceased pensioner must have retired by that date.
It is important that at the time of retirement, the member states the identity of all legal beneficiaries and provides all background information accurately and completely. Misrepresentation or concealment of legal beneficiaries will result in criminal charges.
Importance of Pension Standards for HR and Accountants
These standards are very important because human resource management is responsible for managing the most crucial resource of any enterprise. Therefore, HR professionals must always be aware of all regulations and be able to advise workers on their benefits and entitlements. This ensures that all procedures are up-to-date, avoiding problems with the Labor Inspectorate or other related entities.
By using and respecting these laws and codes, companies can ensure their employees receive the treatment they deserve and are not exploited. Companies are subject to inspection and must operate within the bounds of the law.
A professional accountant, given the nature of their work, must also always be alert to changes in labor legislation and understand its implications for workers. As is well known, this profession offers many areas of specialization, including human resources. Therefore, accountants must maintain a mastery of this subject. Even if not specializing in HR, they will constantly evaluate these laws, as knowledge of the subject is crucial for their accounting or analytical conclusions.
Whether for a management accountant, they should always seek the best for their employees and fulfill this area according to the laws in force, respecting their provisions, invoking the respective employment contract, ensuring their rights in old age, and safeguarding their integrity as a person in the workplace or on the way to their home.