IESS member contribution rates to be reviewed as the system faces a financial crisis

Jan 10, 2019

Ecuador’s Social Security system (IESS) is facing a financial crisis, according to new board of directors president Paúl Granda, who says a reevaluation of the rates that members and employers contribute to the system is underway.

The IESS hospital in Cuenca

IESS, which has 4.4 million members, 579,000 of whom are pensioners, provides retirement payments, health care, as well as other services to its members.

“The situation is complicated and we are in the process of identifying solutions,” says Granda. “Decisions will come through dialogue between the government, members, employers, medical professionals and other players in the system.”

He added: “All options are on the table.”

A major factor in the crisis, which Granda says primarily involves health care services, is the government’s $3 billion debt to IESS. “This needs to be paid but because of budget constraints it will have to happen over a protracted period of time.”

In addition to the debt, Granda blames the crisis on two changes made to the system during the Rafael Correa administration.

Paúl Granda

“First, in 2008 the decision was made to add the children of members to the health care program,” says Granda, a former mayor of Cuenca. “Second, in 2015 the government ended its contribution that covered 40 percent of the system’s costs. Together, these decisions increased expenses and reduced income.”

He added that other changes to the system may have also contributed to the financial shortfall, including the addition of “voluntary” members, such as taxi drivers and housewives, who did not contribute to the system through employment.

Not only must income be found to cover current expenses, says Granda, but it must include money to improve the quality of health care services. “We need to increase the number of medical professionals in the system, improve the appointment scheduling process and upgrade our facilities,” Granda says. IESS operates 760 hospitals, clinics and pharmacies around the country.

Working IESS members currently contribute 20.6 percent of their salaries to the system, 9.45 percent provided by members and 11.15 percent by employers.

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