PALLBEARERS bearing coffins scrawled with the legend “No+AFP” joined tens of thousands of Chileans in Santiago on August 21st to protest against the country’s privatised pension system. Organisers—a mix of unions, pensioners’ associations and consumer-advocacy groups—say that a million demonstrated nationwide (perhaps an exaggeration). Pensions are too small, the marchers complain. After “years of abuse…the people have finally woken up,” says Ernesto Medina Aguayo of Aquí La Gente, a pressure group.

The scheme they revile, launched by the dictatorship of Augusto Pinochet 35 years ago, was a model for other developing countries such as Peru and Colombia. Rather than saddle the government with an unaffordable pay-as-you-go system, in which today’s taxpayers support today’s pensioners even as the population ages, Chile created one in which workers save for their own retirement by paying 10% of their earnings into individual accounts. These are managed by private administrators (AFPs).

In some ways, the system worked. Contributions to the AFPs flowed into capital markets, which boosted growth. Annual GDP growth from 1981 to 2001 was 0.5 percentage points higher than it would have been without the investment, according to one study. This helped lift millions of people out of poverty.

Alas, benefits have not measured up to people’s unrealistic expectations. The scheme’s founders told workers that if they contributed continuously throughout their careers they would receive a generous 70% of their final salaries upon retirement. And indeed, men who chipped in for 30 years or more earned an average pension of 77% of their final salary. But most workers contributed far less. Women took time off to raise children (and retire earlier than men). Many Chileans spent time in informal jobs or unemployed. On average, they contribute for only 40% of their prime working years.

For most people the 10% contribution rate, just half the average in the OECD, a club of mainly rich countries, is too low. As a result, the typical benefit, including a supplement paid to poor people, is 45% of a pensioner’s final salary, well below the OECD average of 61%. Women are worst off. They take home pensions worth 31% of their final salaries, compared with 60% for men. In 2008 the government decided to reward mothers for each child they raised by topping up their pensions, but that does not fully compensate for the shortfall.

Chileans with other grievances have latched onto the pensioners’ cause. Some decry the system’s dictatorial origins. Sceptics of capitalism grumble that the scheme has enriched dodgy fund managers. Two former owners of AFP Cuprum are being investigated on charges that they made irregular campaign contributions to dozens of right-wing politicians. The system has generated high returns for pensioners, averaging 8.6% a year between 1981 and 2013. But the AFPs’ high fees have bitten a huge chunk out of those returns, reducing them to 3-5.4%.

The complaints thus have some merit. The AFPs and the government failed to stress enough that the normal contribution level, interrupted by spells of non-employment, would not purchase pensions that meet the 70% target; just 0.2% of workers top up their contributions. Competition among the AFPs was desultory, allowing them to keep commissions high. Several reduced them after a reform in 2010, in which the AFP offering the lowest commission is awarded all the new contributors.

Some marchers want Chile’s president, Michelle Bachelet, to replace the private pension scheme with a state-funded pay-as-you-go system offering defined benefits. Many experts favour a less drastic reform. Several countries that adopted the Chilean model have moved to a mixed system, in which the state supplements but does not replace private funds, notes Nicholas Barr of the London School of Economics.

Chile is already moving in this direction. A tax-funded scheme introduced in 2008 for Chileans with relatively low incomes, 60% of the population, will pay out more than half the country’s pension bill by 2030, says David Bravo, who led a government commission on pensions last year. On August 9th Ms Bachelet proposed further reforms, including a 5% contribution to be levied on employers, which will go toward topping up the lowest pensions. A new state-owned AFP will provide more competition to private ones. Hidden charges will be eliminated. Rather than bury Pinochet’s pension scheme, Ms Bachelet may give it a second lease of life.