Chile raises pension contribution to 13.5% in August

Effective August, Chile's pension system will see the total contribution rise to 13.5% of wages. The employer's share increases from 1% to 3.5% of the taxable salary, while the employee continues to contribute 10%. The change is part of the second stage of the pension reform and will remain in force until July 2027. Employers bear the full cost, so workers' net pay is unchanged.

The additional 3.5% is allocated as follows: 0.1% to each worker’s individual capitalization account, 0.9% to the new Protected Return contribution, and 2.5% to life‑expectancy compensation and the Disability and Survivors Insurance (SIS). The SIS portion, previously paid by employers, will now be collected by the Instituto de Previsión Social (IPS) for the Autonomous Fund for Pension Protection (FAPP). Future steps include a public consultation on the new investment regime for AFPs, slated for a September release, and a gradual increase of the total contribution to 18.5% by 2033.