The pension robbery: how AFPs leave the elderly penniless in Latin America

Forty years ago, technocrats trained at the University of Chicago arrived in the Southern Cone promising a golden fantasy: if workers handed over a mandatory monthly slice of their wages to pension fund administrators (AFPs), the private companies in charge of managing individual retirement accounts, they would retire at 100% of their final salary upon reaching old age.

Today, in August 2026, reality has slapped millions of families in Chile, Peru and Colombia: more than 70% of retirees under this private scheme receive pensions so meager that they fall below the minimum wage, while AFP executives report annual net profits above 15% for their shareholders. A genuine institutionalized swindle built on the sweat of the working class.

But the problem does not end with low pensions; the real financial trap lies in the illiquidity this model causes the real economy of our nations. Currently, Latin America's AFPs manage the dizzying sum of $450 billion in accumulated workers' savings. Where is that money? Instead of financing the construction of public hospitals, water treatment plants or electric rail networks in the region, most of that liquidity is placed in stock speculation on New York markets or used by finance ministries to plug short-term fiscal holes in exchange for sovereign bonds (debt securities issued by the state) that yield mediocre returns.

It is an absolute madness: the money of Latin American grandmothers and grandfathers finances technological development and multinationals in the Global North, while local SMEs (small and medium-sized enterprises) suffocate for lack of productive credit at reasonable rates. The point is not to return to dismantled state schemes lacking any oversight, but to build public, solidarity-based and intergenerational social protection systems. The wealth generated by workers must stay in the country to finance domestic industrialization and ensure that growing old in Latin America stops being a direct ticket to destitution.