TN 1 (06-14)
GN 01739.025 Chilean Social Security Benefits for the Private Insurance System
A. Eligibility requirements
Although the private insurance systems pay different types of benefits, this section describes only retirement, survivors and disability benefits. These are the only benefits included within the scope of the agreement.
B. Policy for retirement, survivors and disability insurance for the Private Insurance System
Listed below are the eligibility requirements for Chilean retirement, survivors and disability benefits under the private insurance system.
1. Retirement benefits
Chile bases benefit amounts on the worker's total contributions to an individual capitalization account plus accrued investment returns. There are no minimum contribution requirements for entitlement to retirement benefits. At retirement age, a worker may choose to receive periodic withdrawals from his or her account, use the account balance to purchase an annuity from a private insurance company, or select a combination of the two. There are no benefit provisions for the spouse or children of a retirement beneficiary under this system.
a. Full retirement
To qualify for regular retirement benefits workers must:
b. Early retirement
A worker may receive benefits prior to the regular retirement age under the following conditions:
the worker's individual account balance must be sufficient to fund a benefit equal to or greater than 50% of the average of the worker's covered wages (adjusted for inflation) in the 10 years prior to the month of application; and
the worker's individual account balance must also be sufficient to fund a benefit equal to or greater than 110% of the minimum retirement benefit in effect at the date of application.
NOTE: When the applicant files for benefits prior to attaining full retirement age, Chile considers this as an application for early retirement benefits, which results in a permanent reduction of the benefit amount. If the applicant does not file for early retirement, the applicant should file for retirement benefits as close to full retirement age as possible.
2. Disability benefits
To qualify for disability benefits a worker must:
be under normal retirement age;
have an impairment that reduces earnings capacity by at least 66 percent; and
must have been contributing at the date of disability onset or made contributions in 6 out of the 12 months immediately preceding disability onset.
3. Survivors benefits
A survivor is eligible for a survivor’s benefit under the private insurance system if the deceased worker had coverage under employment or was entitled to retirement or disability benefits at the time of death.
A widow must have been married to the worker at least 6 months prior to the date of death, or 3 years if the marriage occurred while the deceased was receiving retirement or disability benefits. If there were minor children or the widow was pregnant at the date of death, the duration of marriage requirement does not apply.
b. Disabled widowers
If the appropriate Chilean agency declares a widower disabled, he is eligible for a benefit under the same conditions as a widow.
c. Surviving child
Benefits are payable to an unmarried child under age 18, age 24 if a student, or any age if disabled.
d. Funeral grant
Chile pays a one-time cash benefit subject to a monthly-adjusted ceiling to the surviving spouse, children, parents, or the person or entity paying the costs of the deceased worker's funeral.
e. Other beneficiaries
The unmarried mother of a deceased worker's biological children and the deceased worker's parents may receive survivor benefits under certain conditions. If there are no beneficiaries, the deceased worker's account balance becomes part of his or her estate.
4. Guaranteed minimum benefit
Under the private insurance system, the state guarantees a minimum benefit to beneficiaries who meet the following requirements:
a. Retirement benefit
20 years of contributions to either the old or the new system.
b. Disability benefit
10 years of contributions; or
Two years of contributions in the five years immediately preceding disability onset; or
if the disability is due to an accident, contributing to the private insurance system at the date of onset.
c. Survivors benefit