Pensions at a Glance 2025: Chile
Table of contents
This country note shows how Chile compares with other OECD countries in Pensions at a Glance 2025. This edition covers recent pension reforms and includes a focus on gender pension gaps.
Population ageing will be very fast in Chile in the forthcoming decades. Given the sharp drop in the total fertility rate since 1990, the current level of 1.14 is now the lowest in the OECD except Korea. As a result, the working-age (20-64) population is projected to fall by 23% over the next 40 years against a fall of 13% in the OECD on average, while the working-age to old-age ratio will steadily catch up to the OECD average before surpassing it markedly in the second half of the century. Despite these unfavourable demographics, Chile is among the minority of OECD countries that has not legislated any increase in the retirement age.
Chile and Mexico are the two OECD countries that undertook a systemic pension reform over the last two years. In Chile, pension benefits for low earners and for women are improved for current pensioners and earnings-related pensions will be increased for future pensioners. This is achieved through a sharp increase in the mandatory contribution rate that boosts future funded defined contribution (FDC) pensions and helps finance new redistributive components. More precisely, the employer pension contribution rate will increase from 1.5% to 8.5% by 2033, bringing Chile slightly above the OECD average for the total mandatory contribution rate, from much below levels today. Of the 7 percentage-point increase, 4.5 will flow into individuals’ FDC accounts initially, increasing to 6 from 2054. The remaining part of the additional contributions will be used to: partly finance new social security schemes (contribution-based basic pension and guaranteed bonds that provide benefits based on contributions with protected returns), starting to be paid in 2025/2026 and thereby complementing existing FDC benefits; and, a compensation for women for the part of their lower FDC annuities that is due to their longer life expectancy given the use of sex-specific mortality tables. These measures will increase the net replacement rate of average‑earning men and women with a full career from age 22 in 2024 by 17 and 19 p.p., converging to 61%. This is now close to the OECD average of 63% for men and 62% for women. Chile has furthermore changed some rules in the governance of the FDC pension funds to reduce fees and increase investment choice options.
Moreover, Chile has increased targeted old-age benefits (Pensión Garantizada Universal, or PGU) by 11.6% on top of regular price indexation. Australia, Iceland and Norway have also increased targeted benefits over the last two years. In Chile, the increase is applied to people aged 82+ receiving up to CLP 250 000 – equivalent to about 21% of gross average earnings or 95% of the average FDC old-age pension – from September 2025, to those 75+ one‑year later and to all other old-age pensioners the year after that. Relative to average wages, the old-age safety level will then be close to the OECD average.
Differences in average pension levels between men and women are large but slightly lower in Chile than in the OECD on average. Women receive pensions that are about one-quarter lower than men’s on average across OECD countries. In 2024, after a large fall over the last two decades, the gender pension gap (GPG) was equal to 21.5% in Chile compared with 22.8% in the OECD on average. Gender differences in lifetime earnings are the main driver of the GPG as a large part of pension benefits is earnings-related. In the OECD, gender differences in expected career duration, hours worked and hourly wages between men and women make a similar contribution to the large gender gaps in expected lifetime earnings averaging 35% in 2023. In Chile, this gap is equal to 46% and gender differences in expected career duration, among the highest in the OECD, account for half of it. The gender gap in expected career duration was almost 6 years lower for women than for men in the OECD on average in 2023. It exceeded 10 years in Chile, Colombia, Cost Rica, Mexico and Türkiye, despite having halved in Chile since 2000.
Net replacement rate after a full career, average earners, women, %
Source: OECD Income Distribution Database.
Difference between the average pension of men and women relative to the average pension of men
Source: Figure 2.1.
The gender gap in average disposable income among people 66 or older is at 5% among the lowest in the OECD and half the OECD average. This gap takes into account other sources of income than pensions, household compositions and income sharing within households. Moreover, there is no correlation across countries between the gender pension gap and the gender gap in disposable income. For example, Chile and Sweden have a similar GPG, around 20%, but the gender gap in disposable income is more than three times higher in Sweden than in Chile, maybe related to fewer older women living alone in Chile as grandparents, particularly widows, tend to live in the household of their children.
The 2025 pension reform in Chile will eliminate the negative impact of higher women’s longevity on pensions from the FDC scheme by providing a compensating bonus to women as if they had men’s mortality tables. Before this reform, the gender gap in future theoretical pension was about 6% for the same career and the same wages. This measure is welcome as ignoring longevity differences between men and women is consistent with the pooling of longevity risks. Moreover, given women’s lower pension entitlements, this avoids lowering further women’s monthly pensions. In the European Union, private pension schemes cannot by law take into account gender differences in longevity to calculate pension benefits, as this would be perceived as discriminatory against women.
In Chile, FDC pensions can be accessed by women at age 60 compared to 65 for men, but the targeted scheme (PGU) is only accessible as of 65 for both men and women, which determines the normal retirement ages for both men and women. Only Colombia, Costa Rica, Hungary, Israel, Poland and Türkiye will allow single women to retire with a full pension at a lower age than men. Effectively, women in Chile start receiving earnings-related old-age pensions 3.0 years earlier than men, which is an unusual large difference among OECD countries. This contributes to inflating the gender pension gap.
The GPG measure accounts for survivor pensions that reduce the GPG substantially in many countries, and by about 20 p.p. or more in nine OECD countries including Chile, Costa Rica, Germany and Spain. In OECD countries, women account for 88% of survivor pension recipients on average and for 97% in Chile and 98% in Japan. However, Chile is among the third of OECD countries, along with other Latin American countries and Spain, where there is no minimum age requirement to receive a permanent survivor pension. Survivor pensions available from early ages discourage women’s employment. In asset-based pensions, pension accruals may continue during periods of maternity and parental leave. In Chile, Germany and Lithuania, mothers receive public subsidies into their pension account based on the number of children.
Old age income inequality is very high
The size of the working-age population will fall fast
Mandatory contribution rates were low but will catch up
Future theoretical net replacement rates are now in line with the OECD average
Contact
Hervé BOULHOL (✉ herve.boulhol@oecd.org)
Andrew REILLY (✉ andrew.reilly@oecd.org)
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The full book is available in English: OECD (2025), Pensions at a Glance 2025: OECD and G20 Indicators, OECD Publishing, Paris, https://doi.org/10.1787/e40274c1-en.
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