The Pension Reform Act, enacted in January 2008, created a system of basic pensions, linked to the existing system, which consisted of three pillars: a solidarity pillar, a contributory pillar and a voluntary pillar. A separate set of reforms to the social security system created a series of programmes to address poverty and promote social inclusion (Chile Solidario programme).

The amount of the basic pension is gradually reduced depending on the level of the recipient’s contributory pension income and other sources of income. Everyone is entitled to a basic pension if they are in the lowest 60 per cent of the income distribution. There is also a basic invalidity pension of about US$150 per month, which was introduced in July 2009. In addition, there is a solidarity “top-up” pension that brings all pensions to approximately $560 per month for those whose total pension benefits are less than this amount.

In recognition of the caring responsibilities of women and their contribution to the reproduction of the labour force, Chile has instituted a woman's pension bond for every child born, which is paid into the mother’s individual account. Simultaneously, child care has been made more easily available to facilitate women's participation in the labour market.

These reforms improved coverage and reduced poverty for more than 600,000 people in 2009. They have also addressed the need for greater intergenerational equity and gender equity; yet they did not significantly change the total cost of the existing system to the State.

Challenges remain, however, and there is an ongoing need to enforce the compulsory nature of contributions for the self-employed and domestic workers, and to ensure they are adequately covered.