226 CultureShock! Chile
savings account (linked to the performance of the fund)
with either the same institution or a different one.
Workers choose their AFP according to level of risk and/
or rate of return. Because the fund managers are private,
there is ample opportunity for competition. AFPs have been
tightly regulated by the government, but these restrictions
are starting to loosen. AFPs can now invest abroad and in a
wider array of domestic sectors. Currently, retirees receive
higher pensions compared to the old system and workers
know the exact amount of their retirement funds at all
times. The government guarantees a minimum pension in
the event that AFP payouts fall below the subsistence level.
It has also dramatically raised savings in Chile, which now
boasts the highest savings rate in Latin America, on par with
developed countries.
Technically, foreign personnel under a work contract
must have an AFP. Contributions are to be paid by both the
company and the foreigner. However, if the foreign worker
has social security outside Chile with basic provisions for
illness, pension, disability, and death, then he or she may
be exempt from making contributions. Check with your
own country’s Foreign Ministry to see if it has an agreement
in place with Chile regarding pension benefits. Since
retirement funds are kept in individual accounts handled
by private pension funds that compete against each other,
if you do join the Chilean system, it is important to do your
homework and study the current and past performances
of these funds.Legalities
It is illegal to work in Chile while on a tourist or student visa.
If you entered Chile on a tourist visa, you can apply at the
Ministry of the Interior—Extranjeria (Foreigners Section)
for a Work visa (Sujeto a Contrato). However, the proper
procedure is to apply for the appropriate visa at a Chilean
consulate prior to your arrival. The paperwork is substantial.
You need a valid passport, a health certificate, a certificate
from the police stating your good conduct and a notarised
work contract from your firm, plus photos.