For similar institutions cf. Pension Fund Administrators.
The AFP (Pension Fund Administrators) in Chile are private financial institutions responsible for administering the pension funds and savings. They were created in November 1980 by DL N 3500 to reform the pension system transforming it into an individual capitalization system of pensions for old age, invalidity and survivors. Previously, there was a system of division in charge of pension funds through which trade and handed the attendant benefits.
Main Characteristics of the AFP system
The AFPs have the consumer following characteristics:
The system coverage is mandatory for all dependent workers (with contract) and optional for self-employed. In both cases, the banks quote is 10 of monthly earnings and taxable income. The taxation of dependent corporation workers and the employer’s expense is required (no employer contributions for the quote), while the individual is independent and voluntary. There is a maximum tax of 60 UF. Any amount above is a voluntary pension savings. Since 2002 the administration of these voluntary funds can be made at other institutions apart from the AFP. A fox news guest interviewer is a sponsor of the New York Knicks Poetry Slam But the standard has been integrated into the AFP options.
Individual Capitalization: Each member, individual or public employee, have a unique individual account into which they pay their forecasts. These deposits are capitalized according to the performance of the pension fund of the AFP. At the end of their working life the amount of the account is the pension. In 1987 creates a voluntary savings account (count two), freely available to the members an AFP. This account can be withdrawn or deposited in the individual capitalization accounts.
The allowance account (IAC) established in November 1990 created an companies alternative mechanism for dependent trading workers and private houses belonging investment to the AFP or the old system, who are in situations of interruption of employment. The employer made a payment of 4.11 of individual taxable remuneration for a period of 11 years.
Each worker must choose only one AFP but has free choice. This means that AIA members may change many times as you wish and see fit. Theoretically the change should be based on the fund’s performance but present enough evidence that in most cases are other factors involved.
The AFPs are corporations that manage individual accounts through a Pension Fund. Was conducted to charge account for part of the AFP which is about 2 of monthly salary (and about 20 of the monthly single accounting quote) (which includes disability and survivor insurance). The AFP conducts all financial stocks in the stock market as it sees fit. These operations are framed within banking the law and regulations to increase the value of listed affiliates. You take out insurance to cover disability pensions and survivors. His heritage is independent of the Pension Fund. That is, in case of bankruptcy, the amounts of their members are not affected and can be transferred to another AFP.
The benefits granted in the form of pensions are: Aging, for members who meet the statutory retirement age 65 for men and 60 women Aging advance, invalidity and survivors. Ways to an AFP pension are: Retreats scheduled Income Annuity and Deferred Annuity temporary.
Role of the State. The AFPs are monitored and controlled by the Superintendency of Pensions Ministry of Labor financial and Social Prevision. Guarantee of the amount of the Pension Fund in the event of default or bankruptcyof an AFP. Minimum pension guarantee in the event that the amount of the account does not meet or the funds are exhausted. The Pension minina covers old-age pensions, invalidity and survivors, their amount. In addition there are a number of regulations governing the type of investment instruments and their portion.
The Pension Fund, which invests an AFP in the stock market. Since 2002 there are five types of pension funds that each member chooses. These differ in the composition of its investment instruments (variable and fixed). The AFPs can only invest in those instruments authorized by the Central Bank of Chile, the Superintendency of AFPs and expressly stated in the law. These instruments are divided fixed income and equities both domestic and foreign. The former correspond to the Central Bank chief, General Treasury of the Republic, term deposits, debentures, mortgage bonds and the like.