Chilean Pension Reform Set to Deliver Benefits to Nearly 3 Million Retirees
Santiago, Chile – A sweeping pension reform in Chile is poised to deliver tangible benefits to approximately 2.8 million retirees beginning in March 2025, marking a significant shift in the country’s social security system. The reforms, decades in the making, aim to bolster pensions, address gender inequities, and re-establish employer contributions to the pension system.
The changes represent a fundamental restructuring of Chile’s pension framework, designed to improve the financial security of current and future retirees. Key provisions include the elimination of collection costs, the implementation of pension gap insurance, and the reintroduction of employer contributions – paused for 43 years – starting with a 1% contribution from August 2025, progressively increasing to 7% plus disability and survival insurance by 2033. These contributions will be employer-financed and will not affect workers’ net salaries.
A significant portion of the new contributions will be directed towards Social Security, specifically to enhance pensions for existing retirees, with a portion also allocated to individual accounts. concurrently, the Global Guaranteed pension (PGU) will increase from $224,000 to $250,000 Chilean pesos, beginning September 1, 2025.
The PGU increase will be rolled out in phases, prioritizing those 82 years and older. Individuals aged 82 or above as of September 30, 2025, will receive the increase automatically that month. Those turning 82 between October 2025 and August 2026 will see the increase in the month of their birthday.By September 2026, the benefit will extend to those 75 and older, and by 2027, all pensioners 65 and older will be eligible.
Further pension increases, ranging from 14% to 35%, are scheduled to take effect in January 2026. These adjustments are attributed to the implementation of benefits for “quoted years” – recognizing a lifetime of contributions – and compensation for life expectancy, designed to address gender disparities within the system, acknowledging women’s longer average lifespans.