By Victor Báez Mosqueira
Last Sunday, June 22, the newspaper La Tribuna—now a digital publication—ran the following headline on its front page: “Analyst Proposes Chilean Model to Reform Pensions.” Further down, it stated: “International analyst César Addario Soljancic, advisor to President Bukele, proposes for Paraguay a pension system based on individual capitalization as an alternative to the current IPS model.” Yet another advocate for the privatization of pension fund management.
We had already anticipated situations like this two years ago, when we argued that the law establishing the Superintendency of Pensions and Retirement in Paraguay was not primarily intended to control and guarantee pension funds, but rather to open the door for banks and financial firms to manage those funds for their own convenience. There were, and will be, no moves without an agenda.
At that time, we extensively described what the Chilean individual capitalization model entails, a system imposed on all citizens during Pinochet’s dictatorship—except for the military and police forces. We gave concrete examples of its harmful consequences for the income of Chilean retirees. Now, since Mr. Addario Soljancic is an advisor to President Bukele of El Salvador, we want to present some data on pensions in that Central American country, which adopted the “Chilean model” in 1999. After 26 years of implementation, the system can be evaluated without fear of error.
To start the debate, we propose presenting publicly available information from Nayib Bukele’s country. For now, we will simply transcribe the data, with the aim of delving deeper as counterarguments arise.
- The Salvadoran digital publication TSCAHORA.com, dated February 7, 2025, features an article by Carmen Rodríguez titled: “Salvadoran Government Has Borrowed $2 Billion from Pension Savings.” It goes on to say: “The Working Group for a Dignified Pension states that the Executive Branch has used at least 80% of the funds collected by pension administrators.” A video interview with Patricio Pineda, leader of that group, confirms the information. Although the government denies it, there are serious doubts about the system’s sustainability.
- A study conducted by the Friedrich Ebert Foundation in October 2023, titled “The Pension System in El Salvador,” notes in its introduction that “access to an old-age pension is a right that very few people in El Salvador enjoy.” In the background section, it states: “In 2022, only 20 out of every 100 men aged 60 or older received any type of pension, while this number drops to 11 out of every 100 women aged 55 or older.” Even though members of the Paraguayan government refuse to address gender issues, the data shows that the private pension system perpetuates gender inequality into old age. We could elaborate further on this, but for today we are focusing on presenting initial data—should they continue to push the Salvadoran version of the Chilean pension model.
In other words, one of the statistical tables published in the cited study states: “In 2022, 80% of men of retirement age had no pension benefits, while approximately 89% of women of retirement age were in the same situation.” This means that only 2 out of every 10 men, and 1 out of every 10 women, receive a pension.
Finally, a report from the Working Group for a Dignified Retirement, dated March 2025 in San Salvador, the capital of El Salvador, concludes: “A new Comprehensive Pension Reform must be discussed, consulted on, and proposed by the citizens, benefiting the workers—not just the state treasury or private interests” (sic). This reflects the disappointment and disillusionment of the Salvadoran working population—both in the formal and informal sectors of the economy.
In future analyses, we should add some comparisons between the Salvadoran and Paraguayan realities. We always say that Paraguay is a Central American country located in the Southern Cone. For instance, El Salvador’s informal labor sector reaches 55%, according to the FES, while in Paraguay it ranges between 65% and 70%. This shows that the “Salvadoran recipe” will not solve Paraguay’s problems.
The unavoidable conclusion is that private pension systems—whether Chilean, Salvadoran, or of any other origin—create highly profitable business opportunities for the financial sector (which Mr. Addario Soljancic appears to represent) and for governments that prefer to use those funds to finance their own spending instead of taxing those who should be paying. But in no way do they benefit the vast majority of people who live by the sweat of their brow and seek the right to a dignified old age.
Asunción, June 30, 2025