Reflections on the Pension System

Abstract

In 2016 discontent with the AFP system became widespread, growing ever larger and finally finding its most visible expression in mass public marches called by critics of the system. On the one hand, it would appear that the current pension system that "the law obliged us" to join years ago has, rather than benefiting us, defrauded us; on the other, the fact that the AFPs' returns have long been "excessive" would constitute an immoral act toward society, since it does not translate into a benefit for the member.

Certain critical points can be identified where the origin of the discontent may lie in the inability to properly understand the characteristics of the AFP system, among them:

− The way in which revenue is generated for the companies and costs are charged to the member

− Members' (mis)information about the performance of their funds and citizens' weak financial literacy.

− The true meaning of profits having been "excessive" over long periods

− The observation of persistent monopolistic conduct in the industry across different periods, as though there were no competition between the companies

− Identifying which is the leading AFP

− The moral dilemma posed by now knowing with certainty that we will live many more years: a life expectancy of 85 on average by 2050, against the 71 expected when the pension system was designed. Do the AFPs really see us as people who will live to 110, according to the mortality tables drawn up by the system's regulatory bodies?