🇨🇱 Chile: Pension Reform and Workweek Reduction Updates

Summary: Chile's pension reform (Law 21.735) brings a net +1% increase in employer cost starting August 2026, and the legal workweek continues its phased reduction toward 40 hours by 2028. No action is required from clients — both changes are applied automatically.

Background

Chile is implementing two separate, unrelated regulatory changes that affect EOR clients: an update to pension contribution rates, and a continued phase-down of the legal maximum workweek.

What This Means for You

Chile is entering the next phase of its pension reform under Law 21.735. The formal pension contribution rate is rising to 3.5% of taxable salary, but because the existing SIS (Disability & Survivorship Insurance) — previously billed as a separate line item — is now folded into this new rate, the net cost increase to your budget is only +1%. This contribution is entirely employer-borne and does not reduce employees' net take-home pay; it will keep increasing gradually each August until it reaches a cap of 8.5% in 2033.

Separately, Chile's 40-hour workweek law continues to phase in. As of April 2026, the maximum legal workweek is 42 hours, scaling down to a final target of 40 hours by 2028. This does not require any employment contract amendments.

What to Do

1. No action needed. Both changes will be applied automatically and reflected on your August 2026 invoices.
2. Factor this into budgeting. Keep the gradual pension cost increase (toward 8.5% by 2033) in mind for long-term headcount planning in Chile.

FAQ

Q: Do I need to update any employment contracts because of the workweek change? A: No — this is a statutory change and does not require contract amendments.

Q: Will this affect what my employees take home? A: No — the pension contribution increase is fully employer-borne and does not reduce employee net pay.