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Under Law No. 21,735, the mandatory employer contribution to Chile's public pension system rises from 7.1% to 7.8% of taxable wages effective August 1, 2032. This is part of a gradual increase schedule that began in August 2025 at 1% and will reach a final rate of 8.5% by August 2033. The contributions are allocated across employees' individual AFP accounts, a protected return mechanism, and the Social Security Pension Fund which finances life expectancy compensation for women and the Disability and Survivors' Insurance.
Effective August 1, 2032, the mandatory employer contribution to Chile's public pension system will increase from 7.1% to 7.8% of taxable wages under Law No. 21,735. This is the penultimate step in a gradual increase schedule that began in August 2025 at 1% and will reach a final rate of 8.5% by August 2033.
Who is affected
All employers in Chile with employees enrolled in the Administradoras de Fondos de Pensiones (AFP) system are required to make these contributions. The increase applies to all taxable wages paid on or after August 1, 2032.
What's changing
The employer pension contribution rate is rising by 0.7 percentage points. These contributions are allocated across three mechanisms: a portion goes to each employee's individual AFP account (private retirement savings), a portion funds a protected return mechanism designed to safeguard pension values, and the largest share goes to the Social Security Pension Fund, which finances life expectancy compensation for women and the Disability and Survivors' Insurance (SIS).
| Period | Employer Contribution Rate |
|---|---|
| August 2031 – July 2032 | 7.1% |
| August 2032 – July 2033 | 7.8% |
| August 2033 onward | 8.5% |
What NEO partners and clients should do
- Update payroll systems to apply the 7.8% employer contribution rate to all taxable wages paid on or after August 1, 2032.
- Review cash flow projections to account for the 0.7 percentage point increase in labor costs.
- Communicate the change to finance and HR teams responsible for Chile payroll at least 30 days before the effective date.
- Prepare for the final increase to 8.5% scheduled for August 1, 2033.
