Chile/ 5.1 General legislation  

5.1.4 Social security frameworks

The Political Constitution of the Republic of Chile acknowledges its citizens’ right to social security (Chapter III, Article 19, number 18), and specifies that the State must guarantee all inhabitants access to basic, universal services provided by public or private institutions, however it also permits the State to require employees to make compulsory social security payments.

The main social security bodies in Chile are the Ministry of Labor and Social Security, created and regulated by Decree Law No. 25 (Chilean National Congress, 1959); the Ministry of Health, created by the same legislation; and the Ministry of Social Development, created in 2011 by Law No. 20,530 (Chilean National Congress, 2011c), the successor to the Ministry of Planning and Cooperation and the preceding Planning Office.

The Chilean social security system includes the following legislation:

-        A pension system funded by individual savings enacted by Decree Law No. 3,500 (Chilean National Congress, 1980). The system is based an compulsory worker contributions (managed by private Pension Fund Administrators [AFP], and other similar private institutions), in addition to voluntary contributions, and public contributions by the State for the poorest 60% of Chileans. The private pension system in Chile has become a lucrative business mainly benefitting pension administration and insurance companies, at the expense of contributors, who incur the risks and losses resulting the administration of the funds and international crises (Riesco & Duran, 2010).

-        The Chilean health system is mixed in nature, and is based on the administration of compulsory worker contributions. The public part of the system is administered the National Health Fund (FONASA), which was created in 1979 and regulated by Decree Law No. 2,763 (Chilean National Congress, 1979c), while contributors may also choose for their funds to be privately administered by Health Insurance Providers (ISAPRE), which were created in 1981 and are regulated by Decree Law No. 3 (Chilean National Congress, 1984). The legislation on the health system has undergone successive amendments, which have been consolidated under Law No. 20,015 (National Congress of Chile, 2005d).

-        Workplace safety: In Chile this area is addressed by compulsory Social Insurance for Workplace Accidents and Occupational Diseases, created by Law No. 16,744 in 1968 (National Congress, 1968) providing economic and medical coverage for affiliates, and requiring workers and companies to carry out preventative workplace activities.

-        The benefits for families consist of the following:

  • Family Allowance: A State subsidy for working beneficiaries and their families, whose income is equal to or less than $501,978 and who are affiliated to a social security program. 
  • Maternal Allowance: A State subsidy for pregnant Family Allowance beneficiaries.
  • Sole Family Subsidy (SUF): a State subsidy for those who do not receive the Family Allowance because they are not affiliated to a social security system.

-        Cajas de compensación (Workers’ compensation funds): Private, non-profit corporations that manage their affiliates’ social security benefits under Law No. 18,833 (Chilean National Congress, 1989c).

-        Unemployment protection in Chile consists of the following:

  • Unemployment Insurance: created in 2002 and regulated by law No. 20,328 (Chilean National Congress, 2009c) to protect unemployed workers. It is funded by compulsory savings by workers and employers, and by a complementary contribution from a State social fund. All public or private workers who began or resumed employment activity after October 1 2002 are eligible.
  • Unemployment subsidy: created in 1982, by Decree Law No. 150 (Chilean National Congress, 1982b), consisting of monthly economic assistance for a maximum period of 360 days for public or private employees who have lost their job for reasons outside their control and who are not eligible for Employment Insurance. 

For more information on the Chilean social security system, please visit www.previsionsocial.gob.cl.


Chapter published: 28-12-2013


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