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Chile offers a high-profile case study in addressing the social challenge of providing for the elderly. While the domestic economy is revitalizing, foreign countries are shrouded in the new crown epidemic. With economic revitalization and the fight against the pandemic, each country is looking for its own path. The Chilean government has adopted an innovative pension policy in an attempt to solve the dilemma faced by the pension system while ensuring the basic livelihood of the people.
Throughout its history, Chile had been a model for a social system, but achieving the goal of providing for the elderly had plagued society. In the early 70s, the Chilean government tried to copy the Soviet model, but ended up in severe economic difficulties. At that time, Chile's traditional pay-as-you-go public pension scheme led to the bankruptcy of the pension system, and social conflicts and group conflicts escalated.
Faced with the economic crisis, the Chilean government hired Friedman, an economist from the Chicago School, to try to save the country through "neoliberalism." However, this economic thinking did not work and the economic situation in Chile did not improve. The government began to think about the pension system, so in 1981, Chile introduced a private pension system based on the accumulation of individual accounts. Under this system, individual pension accounts are paid by employees, and the government institutionalizes this through policies and regulations, making it mandatory for the public to participate in insurance. Over time, however, the system also began to show problems.
The practical results of the private pension system are not satisfactory. First, many retirees receive pensions far below the promised high returns, have a sharp decline in quality of life, and have to rely on their children. Secondly, the coverage is low, and only some insured persons are able to receive a full pension. Third, the problem of social injustice is prominent, and the burden on the people at the bottom is much greater than that of the upper society, resulting in a further widening of the gap between the rich and the poor. Finally, weak supervision and the lack of effective supervision of privately managed pension insurance make the net return of individual accounts low.
Faced with these problems, the Chilean government has carried out several rounds of reforms. In 2008, they established the "New Solidarity Pillar" project, which provides a basic solidarity pension and includes flexible workers in the public pension system. However, the effect of this reform has not been significant. In 2019, the Chilean government introduced a new pension policy, increased the contribution rate, established an incentive mechanism for delayed retirement, and tried to increase pension payments.
However, the example of Chile also reveals a problem: capital is not reliable in solving the problem of old ageing. The private pension system ultimately needs to be supported by the state, and those who design and implement it often make huge profits through high management fees, regardless of the livelihood of the people. Chile's pension model once again proves the cold-blooded nature of capital.
In China, in the face of a huge population and aging problems, pension reform needs urgent consideration. The solidified model cannot solve the problems of the future, and the pension system must be continuously iterated from the perspective of sustainable development. In this process, we need to take caution and be wary of the indifference of capital, so that the old-age security can truly benefit every elderly person.
In Chile's pension system, we see a series of problems and challenges. First, the private pension system has not paid off as high as originally promised, with many retirees earning pensions well below the minimum wage, a sharp decline in quality of life, and having to rely on their children to make ends meet. Secondly, the coverage is low, only some people can guarantee a full pension after retirement, and many people do not have enough pension income. Third, the pension system exacerbates social inequality, with high-ranking officials receiving high pensions, while people at the bottom have to pay a considerable proportion of their salaries, but cannot enjoy the corresponding pension treatment. Finally, weak supervision and the lack of effective supervision of privately managed pension insurance make the actual returns far less than expected.
From Chile's experience, we can draw some lessons. First, governments play a vital role in providing for the elderly. While private pension systems can encourage individual savings, they ultimately require the government to take risks and protect the elderly at the bottom of society. The government needs to establish a more robust, fair and sustainable socialized pension system to ensure that everyone can enjoy basic living security in old age. Second, the regulatory mechanism must be strengthened to ensure the rational distribution and management of pensions, prevent infringement of funds, and protect the rights and interests of participants. In addition, the pension system needs to better adapt to the aging population and changes in the financial environment, and constantly carry out reforms and adjustments to ensure sustainable development in the future.
In general, Chile's experience has taught us that relying solely on capital is unreliable in solving the problem of providing for the elderly. Governments should play a more active role in establishing a more robust and sustainable pension system to ensure that every citizen is entitled to dignity and security in old age. Only in this way can society truly achieve the goal of providing for the elderly.
In confronting the profound social problem of providing for the elderly, we need to learn from Chile's experience and recognize its lessons. First, the government should actively intervene to formulate and implement fairer and more reasonable pension policies. This means that governments need to ensure that policies truly reach all those who need to be protected, rather than just a few. Policy formulation should take full account of the differences between different groups, especially for special groups such as women, low-income families and flexible workers, and the government needs to provide additional support and protection so that more people can enjoy basic living security in old age.
Second, the regulatory mechanism must be strictly enforced. The government needs to set up an effective regulatory system to ensure that the use and investment of pensions comply with laws and regulations, and also needs to conduct strict audits and supervision of pension management companies. Transparency and openness are key to building trust, and only when the market is sufficiently transparent can participants better understand their rights and responsibilities. The regulatory role of the government is not only to protect the interests of individuals, but also to maintain the fairness and stability of society as a whole.
In addition, access to education and information is essential. The government should increase the popularization of pension knowledge to the public and improve people's awareness of the pension system. Only when the public understands their rights and responsibilities will they be better able to participate in the pension system and make informed decisions on their own. Education is not only to improve personal financial literacy, but also to cultivate social consensus, so that everyone realizes that it is the responsibility and obligation of society to provide for the elderly.
Finally, governments need to remain flexible and innovative. In the face of rapidly changing demographics and economic situations, the pension system needs to be continuously adjusted and improved. The Government should encourage research institutions and experts to participate in the research and design of pension systems in order to better meet the needs of society. At the same time, the government should also encourage financial innovation, promote pension management companies to provide diversified products and services, provide more choices for participants, and improve the income and stability of pensions.
In solving the problem of providing for the elderly, we need the joint efforts of the government, all sectors of society and individuals. Only through multi-party cooperation and the establishment of a perfect pension system can we truly achieve the goal of providing for the elderly, so that everyone can live a stable and happy life in their old age.
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