Chile government weighs changes to pension fund affiliate auctions and public‑sector honorario labor

Chile's executive is debating whether to modify the upcoming licensing of affiliates of private pension fund administrators (AFP). Under current law, starting in August 2027 the state will auction 10% of non‑pensioned affiliates – more than one million people – every two years, coinciding with the launch of generational funds in April 2027. The ministries of Finance and Labor are examining options such as extending the auction timeline or reducing its size, but no decision has been taken. The AFP industry warns that the schedule could hurt fund profitability, while economists suggest limited adjustments would require legal reforms. Subsecretary of Social Welfare Elisa Cabezón said the government is assessing any risk to returns and may propose a short law to lengthen deadlines, as political opponents label reopening the debate a “Pandora’s box.”

At the same time, discussions about possible public‑sector staff cuts have highlighted the precarious situation of thousands of honorario workers who perform permanent state functions without formal labor protections. Legal experts and labor advocates argue that any move toward greater flexibility in public employment must first regularize these workers, who lack official recognition despite working under supervision, schedules and directives like regular staff. They warn that new rules aimed at formal employees could inadvertently increase vulnerability for honorario staff, calling for a coherent approach that balances fiscal efficiency with workers’ rights.