Employment Tax

Chile | Update: new pension reform 2025

Summary

As of March 26, 2025, a new pension law has been published in Chile, introducing measures that will impact employees, employers and retirees. The primary goals of the reform are to increase retirement benefits for employees and establish a new social insurance system for current pensioners. To finance these objectives, the reform introduces an employer contribution of 8.5% of taxable income, creating a new mixed system that combines individual capitalization with contributory social insurance. It is important to note that this new employer contribution will be subject to the social security caps for pensions, as outlined in Article 16 of the Decree Law 3500 (around 3.700 USD).

The detail

• Main measure: The reform establishes a new employer contribution of 7% of the taxable income, which will be added to the existing 1.5% employer contribution for Disability and Survivor Insurance. This total contribution of 8.5% will be distributed between individual capitalization accounts (4.5%) and social insurance (4%).
• Mode of implementation: The new 8.5% employer contribution will be introduced gradually, beginning with 1% of taxable income. The increase will be implemented over a period of nine years, with the possibility of extending it to eleven years if an external evaluation of the Tax Compliance Law indicates a lower-than-expected revenue effect, in accordance with the recommendations of the Autonomous Fiscal Council.
• Next key dates: The pension contribution increase will begin in August 2025, reaching 1%.

Contact us

For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively through the following emails from the Vialto Partners Chile employment income/social security team:

Joan Carbonell
Manager

Patricio Treuquemil
Director

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