Social security contributions in detail
All employees must pay approximately 13% of their salary into a pension fund, which is paid into an individual account. Employees must also pay 7% of their salary towards health insurance. These contributions are withheld by the employer from the employee’s monthly salary and paid directly to the pension fund administrators and health care institutions.
There is a limit on contributions payable from the employee’s income to the pension fund. The monthly income taken into account for these purposes is equivalent to 79.2 ‘Inflation Indexed Units’ (‘UF’), which amounts to CLP 2,183,227 (EUR 2,916.39). The same limit applies in respect of health insurance but the employee can purchase a more expensive health plan, in which case the employee must pay a higher amount. Further, the employer is legally required to insure against accidents at work and professional diseases. The contributions are as follows:
- a basic contribution of 0.9% of the employee’s taxable wages; and
- an additional contribution (which varies based on the organisation’s activities and associated risks, capped at 3.4% of the employee’s taxable income).
Under the law on unemployment insurance both the employer and the employee must contribute as follows:
- employee: 0.6% of taxable income;
- employer: 2.4% of taxable income.
There is also a limit on these contributions for unemployment insurance based on the income of the employee. The monthly income taken into account for these purposes is equivalent to 118.9 UF, which amounts to CLP 3,277,598 (EUR 4,378.26).
Author: Munita & Olavarría
Date: March 2019
Note: All currency conversions into EUR were made on 1 February 2019, using a mid-market rate.