National Pension System - administered by the State through the Office of Pension Normalization ("ONP").The National Pension System is a solidarity system, in which all the affiliates contribute to a common pool that is used to pay pensions to the current pensioners.
Private Pension System - managed by Private Pension Fund Administrators ("AFP").The Private Pension System is an individual capitalization system, where the contributions made by the employee are deposited into his personal account, called the Individual Capitalization Account ("CIC"), which increases month per month with the new contributions and the profitability generated by the investments of the accumulated fund. The employee’s pension is financed by the amount cumulated in their own CIC.
The employer is responsible for making the contributions to both the National Pensions System and Private Pension System, through the deduction of the corresponding percentage through the payroll. In the case of the National Pension System the contribution rate is 13% and for the Private Pension System it is around 12%.