Chile CEO warns millions to receive pensions below minimum wage

About 2.5mn Chileans will retire with a pension that is below the minimum wage, currently a monthly 264,000 pesos (US$396).

That's according to local financial newspaper Diario Financiero, which cited data disclosed by local private pension fund manager AFP Habitat's CEO, Cristián Rodríguez.

About 18mn people live in Chile.

The figure of 2.5mn is a rough estimate and was calculated based on contributions made in March and on a replacement rate of 70% for men and 50% for women. It is also based on a monthly gross salary contribution rate of 15% and a real interest rate of 4% - and on the assumption of no contribution gaps.

The contribution rate is currently 10%. The government, in a bid to overhaul a system that has been widely criticized because of the low pensions retirees receive, is due to introduce a reform bill to congress in July which includes raising the contribution rate to 15%. The increase would be phased in and paid for by employers.

"To this we must add that there are 4.5mn [pension] system members who are not actually contributing," Rodríguez was quoted as saying.

The executive was also reported as criticizing proposed measures designed to boost competition in the pension system, particularly in the area of tenders for new contributors and their possible expansion.