Proposed IESS changes would extend working years to retirement and recalculate pension amounts

Jul 6, 2023 | 31 comments

A special commission appointed by President Guillermo Lasso to study Ecuador’s Social Security system (IESS) has proposed increasing from 30 to 35 the number of years workers would need to qualify for a retirement pension. Following more than five months of work, the commission presented their findings to Lasso on Monday.

Unions are criticizing proposed changes to Ecuador’s Social Security system, claiming the will harm workers.

Amidst criticism from social activist groups and unions, the commission, led by Augusto de la Torre, former head of the World Bank for Latin America, evaluated methods to make disability, old age and death insurance sustainable. According the IESS board, the system carries an annual debt of almost four billion dollars.

According to de la Torre, major changes to the system must be made to keep it solvent. “It is unworkable in its current condition,” he says. “The government is covering the shortfall, but it does not have the resources to continue propping it up. Like in other countries, the Ecuadorian population is aging, which means there will be fewer active workers to support retirees and those with disabilities. The situation also affects the IESS health system, which has struggled to maintain adequate services in recent years.”

In addition to extending working years for retirement, the commission is also suggesting a readjustment in the minimum age and changes in the table to calculate the pension and modifications to encourage increased voluntary affiliation.

Although full details of the plan have not been released, the United Workers’ Front (FUT) blasted the proposal on Wednesday, claiming it will reduce worker benefits and require higher worker contributions to the system. FUT also claims that the changes conceal a possible maneuver by government to hand over pension funds to private companies.

Several attempts to modify the IESS system have failed to advance in the National Assembly in recent years, which prompted the president to form the special commission to propose changes. Lasso also asked the commission to consider changes to the IESS health system.

The FUT and other unions accuse Lasso of announcing changes following his invocation of the cross death, with dissolved the National Assembly and allows him to rule by decree.

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