In Chile, social security contributions are made through both compulsory and voluntary payments. These payments are made by the employee, deducted from the employee’s salary, with the exception of Disability and Accident Insurance, Work Accident Insurance, and Severance insurance, which are payed by the employer.
Following, you may see a brief informative table of the obligatory contributions to pay. It is important to highlight that foreign residents with a dependent work contract are also entitled to all compulsory contributions under the same conditions as local employees, as established in the Labor Code:
*: The AFP commission varies according to the AFP chosen by the member
**: Includes SIS
***: 0.93% base + percentage of risk associated with the economic activity carried out by the company or the self-employed worker
Based on the above information, it is important to mention that there is a debate about an imperative need to modernize the pension system in Chile, which is controlled through private financial institutions, and move towards a more socially inclusive framework.
Representatives from different sectors are considering the need to involve the existing individual capital model with a welfare system that ensures the role of the State’s in Social Security.
Although the reform discussions are in their early stages, the growing questioning of the current system creates space for a dialogue about the changes to be introduced in the future.