Christian Science Monitor left out key facts in evaluation of Chilean Social Security system
Research ››› ››› ANDREW SEIFTER
In a March 14 article titled "In Britain and Chile, lessons for revamping Social Security," the Christian Science Monitor touted Chile as "a model of how to retool Social Security," but ignored the adverse impact of Chile's privatized system on many poor and middle-class workers.
In the report, which also appeared in the March 14 edition of USA Today, the Monitor claimed that "Chile's bold moves pay off," and quoted a Santiago-based analyst's claim that returns on Social Security investments "are much higher under the new [privatized] system." But, as Media Matters for America has documented, while the Chilean program does earn "an average 10 percent annual return on investments," according to a January 27 New York Times report, "many middle-class workers who contributed regularly are finding that their private accounts -- burdened with hidden fees that may have soaked up as much as a third of their original investment -- are failing to deliver as much in benefits as they would have received if they had stayed in the old system." The Times also documented that the system fails to provide many poor Chilean workers with "even a minimum pension," while many others "remain outside the system altogether."
Further, Ricardo Solari, Chile's minister of labor and social security, told the Times that "it is absolutely impossible to think that a system of this nature is going to resolve the income needs of Chileans when they reach old age," and a Chilean government official specializing in pensions, who spoke on the condition of anonymity, said: "What we have is a system that is good for Chile but bad for most Chileans. ... If people really had freedom of choice, 90 percent of them would opt to go back to the old system."