ECONOMY

The Other Pension System: Chilean Security Forces Retire Comfortably

The congressional debate surrounding the 10% withdrawal from privately managed pension accounts (AFP) has again exposed the system to criticism. However, the AFP system is only one of several pension systems Chile has. Two big ones are exclusively for the military and the police.

The lower house recently approved a measure to allow citizens a one-time 10% withdrawal from their privately managed pension funds, called AFPs. But the discussion surrounding the bill – which is now in the Senate – has overshadowed the existence of several other pension systems.

Two other systems are the national defense provisional fund (CAPREDENA) for the military and the provisional fund for the Carabineros police force (DIPRECA), and the pensions they receive every month are, especially compared with the AFP system, not bad.

Armed Forces Pensions

The military’s pension system was created in 1817 after the battle of Chacabuco. With the fund, the newly formed government helped the families of soldiers who fell during the fight for independence. And after the Pacific War in 1879, the government created the Society for the Protection of Widows and Orphans of the Martyrs of the Fatherland, further increasing help for the forces.

But at the turn of the century the government had to create a new system in response to major socioeconomic change. In 1915, the armed forces pension fund was created. It was modified in 1953, when it was turned into the current system. Changes included implementing a fund for emergency loans and the solidarity fund to finance soldiers’ healthcare.

To fund CAPREDENA, 5% are deducted from each member’s monthly pay. Members can receive a pension after 35 years of service. If they are KIA, the pension goes to their family. The payout varies according to the rank the soldier retires.

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According to a study by Fundación Sol, a high-ranking officer receives between US$1,900 and US$3,175, while a lower ranking soldier will receive a monthly pension of around US$1,020. In 2018, over 70,649 retired officers received an average payout of US$2,500 per month.

This pension system has been in the spotlight since the return to democracy 30 years ago. One of the main complaints relates to personnel convicted of violating human rights receiving pensions while in prison. For example, colonel Osvaldo Andrés Magaña Bau, convicted for executing 14 farmers in 1973, receives US$3,302 per month.

Police Pensions

The first police pension fund was created in 1924, three years before the Carabineros were founded. But they received a special pension fund upon their creation, which was first only accessible for Carabineros and only over time included investigations police (PDI) and later the Gendarmerie, responsible for the carceral system.

In 1976, the system was overhauled and renamed the DIPRECA. It also was absorbed into the Defense Ministry and as such became publicly financed. Similar to the armed forces pension funds, the police fund also covers healthcare.

In 2018, DIPRECA paid over 68,082 pensions, over half of those came from retired officers while the other half consisted of widows, orphans, and officers injured in the line of duty. 78.4% of the pensioners were Carabineros, 10.3% were PDI, and 10% belonged to Gendarmerie, with a 1.3% going to other units affiliated to these institutions. On that same year, DIPRECA paid on average, US$1,244 per month to Carabineros, US$1,694 USD to Gendarmerie and US$1,915 to PDI.

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