Information on the updated pension calculation method from the Ministry of Labor: details explained
In a groundbreaking move, Chile has introduced a new pension allocation mechanism as part of its recent pension reform under Law No. 21.735, enacted in 2025. This reform introduces a mixed pension model that integrates individual capitalization accounts and a Social Security Pension Insurance within the contributory pillar.
The new system channels contributions for age-related payments, disability pensions, and survivor's pensions through a mix of individual accounts and the FAPP fund. This guarantees benefits protected by the state Social Security layer, aiming to unify and simplify benefit allocations while providing protection based on cumulative contributions and social equity.
Employers are responsible for handling pension procedures, including submitting documents for their employees' pension allocation in a timely manner. It's crucial that employers check if there's enough data on the employee's work history for pension allocation. In cases where records before 2003 are needed, employers may need to request wage certificates.
Individuals who haven't worked before reaching the general retirement age (58 for women and 63 for men) should visit the local labor, employment, and social protection office for guidance.
The applications for these pensions are processed at the same office. For age-related pensions, applications can now be submitted a month before or a month after one's birthday. Applications for disability pensions should be submitted within three months of the disability group being established, while applications for survivor's pensions should be submitted within 12 months of the death of the breadwinner.
The local labor, employment, and social protection office also provides guidance based on the applicant's personal circumstances. The Ministry of Labor and Social Protection has simplified the pension allocation mechanism to make it more accessible for all.
It's important to note that the new system does not affect the mechanisms for disability and survivor's pensions. The applications are still processed at the same office, and the deadlines for submission remain the same.
This answer is based on Chile’s pension reform described in search result [2], as the other results pertain to different countries or different pension topics unrelated to the new simplified allocation system. The reform also includes a bidding system for AFPs to enhance competition and reduce fees, aiming to provide a more efficient and cost-effective pension system for all Chilean citizens.
The new pension allocation mechanism in Chile, introduced by Law No. 21.735 in 2025, integrates contributions for age-related payments, disability pensions, and survivor's pensions into a mix of individual accounts and the FAPP fund, which is part of the business and finance sector.
Employers play a crucial role in the new system by handling pension procedures, ensuring they submit documents for their employees' pension allocation in a timely manner and that there's enough data on the employee's work history for pension allocation, sometimes requiring wage certificates for records before 2003.
