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6,000 teachers to retire: Teachers' union says pension funding is insufficient

ChilNet extract from El Mercurio
25 January 1997

The government is pushing legislation to help cover the retirement of 6,000 grade school and high school teachers in 1997, addressing the problem of thousands of teachers each year who are at retirement age but choose not to leave work because of low benefits.

Ministry of Education (Mineduc) Undersecretary Jaime Perez de Arce explained this weekend that 3,500 retirements will be financed through Law 19,410 of 1995, while another 2,500 will be covered by a bill for extraordinary remunerations, now before the Chamber of Deputies.

"Both initiatives are fully financed and satisfy in good measure teachers' retirement needs," Undersecretary Perez de Arce said.

The Teachers' Union attacked the retirement plan, however, saying that the legislation is insufficient and discretionary. Some 10,000 teachers are at retirement age, the union says, not the 6,000 the government proposes to cover.

In addition, the union says the retirement benefits themselves are too low. National Director Carlos Vasquez estimated that the funding for the existing law will provide a retirement package of approximately $1 million pesos (US$2,380) to each of the 3,500 teachers covered. "This package is totally insufficient because on average teachers should be receiving not one but four or five million pesos," he said. "And the municipalities are not going to provide funding to cover the difference. Under these circumstances the teacher chooses not to leave the system because financially it is not in his best interest."

Further, said Dario Vasquez, union treasurer, both the existing law and the bill are disturbing because they leave retirement approval up to the employer, i.e., the mayor of each municipality. The union argues that any teacher who meets the requirements by age or years of service should be allowed to retire with full benefits, rather than be subject to mayoral discretion.

The Chilean Association of Municipalities agreed, saying benefits should not be subject to the discretion of the Ministry of Education.

In addition, the association blamed the existing law and the ministry itself for "slowness and excessive bureaucracy," which it says have impeded municipalities from saving over US$2.4 million. The association further added that additional retirement benefits should be completely financed by the government rather than the municipalities, which currently have a large deficit in educational funding.

The Ministry of Education responded to the criticisms by saying that other teachers will be allowed to retire voluntarily and receive benefits. In addition, said Undersecretary Perez de Arce, the government can assist the municipalities with loans to finance retirement benefits.

Both the Teachers' Union and the Association of Municipalities have been invited to present their concerns about the legislation before the Chamber of Deputies tomorrow. *