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Instituto Tecnológico de Santo Domingo

Low wages, main obstacle to guarantee the decent retirement of workers

The Social Security Observatory (OSES) released the results of the study "Sufficiency and Sustainability of Pensions in the Dominican Republic" that points out the need to increase wages and reform the pension system

SANTO DOMINGO. - Despite the legal reforms and institutional to the financing regime of pensions in force in the country, low wages are main joba for to guarantee un worthy retirement workers, so the investigation establishes "Sufficiency and Sustainability of Pensions in the Dominican Republic", presented by the Observatory of Social Security (OSES) of Instituto Tecnológico de Santo Domingo (INTEC).

In this regard, investigators Arlette Pichardo and Joan Guerrero, in charge of the investigation, considered that the Integral reform announced in the 13-20 law debería accompany of a deep reform from social policy as a whole with economic content, which endorses the State's commitments to the pension system contemplated in the 87-01 lawwhich creates the Dominican Social Security System.

Among those commitments they cited the establishment a non-contributory scheme and the start-up of effective mechanisms de assurance from población without condition of labor dependency, the Acquisition Rights Recognition Bonus and the guarantee of the minimum pension through Social Solidarity Fund.

During the presentation of the study, Eladio Pérez, coordinator of the OSES, recommended making an improvement in the wage policy to increase the workers' salary, as it is a determining variable in the sufficiency of benefits that directly affects capacity accumulation.

The study, which was presented in a virtual way, contemplated the creación de Scenarios de microsimulation in which adjustments between the possible and the ideal were recommended. A First stage base or trendHe states that, if the current pension financing regime in the Dominican Republic is maintained, without modifications to Law 87-01 and its initial reforms, the country's low position in terms of insufficient benefits is confirmed. In this case, the gross replacement rate (TBR) calculations for the old-age pension give an average value of 24%.

En a second scenario a partial reform with the modification . scheme de Commissions of the pension fund administrators (AFPs) and some improvements in the TBR are observed, although they are not significant, the general average goes to 30% and none of the socioeconomic profiles considered reaches 40%. Regarding the indicator of effective contribution periods, in this scenario relative improvements are observed in the fulfillment of 360 quotas and all profiles reach 300 quotations.

In a third scenario, Pichardo and Guerrero recommend a broader reform with parameter adjustments. In this context, if to the combined effect of the partial reform contemplated in Scenario II, an improvement in the salary is added, although in a modest way, TBR is obtained in a more reasonable way for the set and four of the profiles are placed by above 40%.

The researchers explained that if an increase in the accreditation to the personal account of 0.5% was generated progressively until reaching 12.5% ​​(average rate of the set of 28 Latin American and Caribbean countries analyzed in this study), the gains in the RBTs are remarkable and 21 of the 30 socioeconomic profiles are above 40%. In this case, the highest TBR reaches 61.1%; assuming an increase in the legal age of old-age pension.

"The accumulated evidence reaffirms the need for quality informed debate. The vocation of social dialogue of the official sector seems to be the best instrument so that the demands of the citizens, manifest and latent, can be addressed in a timely manner and resolved through instruments of democratic life, "concluded the coordinator of the OSES.

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