Luis Rodríguez, Chairman of the Board at AFP Habitat, has leveled a series of criticisms against the pension reform passed by Congress in early 2025. In a recent letter to shareholders, the top executive expressed his hope that legal modifications will be pushed through in the short term to correct the system's structural flaws.
Rodríguez questioned the loss of worker autonomy following the implementation of the regulations under Gabriel Boric's administration. According to the executive, the reform restricts members' freedom of choice by introducing mandatory fund allocations based on age.
Criticism of automatic allocation and replacement rates
The executive of the ILC-controlled administrator described the mechanism that automatically assigns members to the AFP with the lowest commission as "striking." He argued that this change does not benefit pension savings, as commissions are only paid at the time of contribution.
"The commission is not part of the pension savings, so its reduction has no impact on the amount accumulated for retirement and, consequently, does not improve pensions," Rodríguez stated in the company's annual report.
Furthermore, he warned that member turnover will be forced, as 10% of workers will be reassigned to a different administrator every two years. This process would take place without considering the profitability or solvency of the receiving entity.
Regarding replacement rates, Rodríguez pointed out a methodological distortion in government studies. He argued that using accumulated income from different years for calculations can result in a replacement rate that is up to 75% lower than reality.
Finally, the Habitat chairman criticized the reform for failing to address fundamental issues such as low contribution density or the retirement age. "The main problems of the pension system—low contribution density and early retirement relative to life expectancy—were not addressed," he concluded.
