The discontent of many Chileans with the pensions that the AFPs surrender accuses, among other things, the rigidity and little adaptability with which many of our institutions are designed. Today, it is inexplicable that when designing them, some element that revises the evolution of the most critical variables has not been incorporated and that the necessary adaptations have been made as a result of this revision.
We missed reading Darwin (we live longer and more and more women join the labor market), understand the precariousness of the work environment of the less skilled and exercise greater skepticism about the behavior of real interest rates. Little is mentioned, but insurance companies are one of the final links of the production chain of pensions through the annuities that hire those who are pensioned. The life annuity that these companies offer depends on the actual interest rate generated by the instruments that support it and those are possibly at one of the lowest levels of the last 100 years and will probably continue as long as the excess capacity There are currently in the world.
The individual capitalization system administered by the AFPs has been in force in Chile since the early 1980’s. The hard and stiff reality shows us that the initial assumptions about their variables and more sensitive factors, mutated each other simply were not met. The reproach is not that they have changed, but the time we have taken to take it up and do something serious about it.
As can be seen from the graph of the population pyramid in Chile, the demographic structure has changed and will continue to do so significantly. Birth rates have declined and will continue to fall, and the population is increasingly longer. By 2050 more than a pyramid we should speak of a rectangle with more equal age ranges.
The speed and magnitude of these changes must be incorporated into the design of new institutions and the revision of existing ones that may have been overcome by reality and change. An example of this can be insurance for work accidents. Our economy today has a very strong presence in services whose accident rate is much lower than that of the manufacturing processes of 60 years ago. It is therefore important to incorporate the change in the design and operation of a large number of institutions in our country which, mistakenly, assume that they will not change over time, becoming rigid and then obsolete.
In a world that advances at a thousand per hour, which is transformed every second and that evolves permanently, it is a grave mistake not to take into account technological changes, demographic and all that come hand in hand with the new knowledge economy. Let us not make them in stone.
Juan Pablo Bórquez Y.
Partner director
BY Advisers
Jpb@byestrategica.com
