FILE - Demonstrators take part in a protest against national pension system in Valparaiso, Chile, March 26, 2017.
FILE - Demonstrators take part in a protest against national pension system in Valparaiso, Chile, March 26, 2017.

SANTIAGO - Leftist Chilean presidential candidate Beatriz Sanchez on Thursday proposed a new social security system to replace the nation's public-private pension scheme that has been copied throughout the globe but is increasingly unpopular domestically.

Sanchez, who is representing Chile's far-left Frente Amplio bloc in the November election, told journalists her proposed pension system would draw funds from the state and employers, as well as workers, and would redistribute funds from a common pot.

She said it would mark the elimination of the current system, in which Chileans are mandated to put savings into one of six private pension funds, known as AFPs. They control some $160 billion in assets.

"We need to ensure dignified pensions for Chile and this requires structural, profound, and gradual changes," Sanchez said at a press conference.

Chile's highly privatized pension system, which was introduced in the 1980s during Augusto Pinochet's dictatorship and was historically seen as a model by many economists, has been criticized in recent years on a number of fronts, including what many see as insufficient payouts.

Former President Sebastian Pinera, a conservative billionaire, is the front-runner in the presidential race, with a large lead over center-left candidate Alejandro Guillier and Sanchez. However, it is unlikely any candidate will win enough votes in the Nov. 19 election to avoid a December runoff, and any second-round vote with Pinera looks to be much closer.

FILE - Chile's President Michelle Bachelet deliver
FILE - Chile's President Michelle Bachelet delivers a speech at the national congress building in Valparaiso, June 1, 2017.

Chilean President Michelle Bachelet sent a bill to Congress earlier this month that would increase payroll contributions to the pension system to 15 percent from 10 percent, with the hike paid by employers. However, her governing coalition has become increasingly divided in recent months and it is not clear if the bill will pass before Bachelet's term ends in March 2018.

Pinera has proposed more modest changes to the pension system than the current government, while Guillier has proposed a path similar to that of Bachelet.

Sanchez's proposal would allow Chileans to invest in AFPs, but on a voluntary basis, meaning they would have the same status as any other private investment funds. The minimum monthly payout would be tied to Chile's minimum wage, while the monthly payouts would be capped at $4,100.

Her proposal would also lower workers' contributions to pensions by 1 percentage point, while bumping employers' contributions by 5 percentage points.