Chile: Chamber Approves Bill for Withdrawal of Pension Funds

After a heated discussion, the Chamber of Deputies Chamber approved the constitutional reform project that seeks to allow the withdrawal of up to 10% of pension funds, to face the economic and health crisis brought about by the COVID-19 pandemic.

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The vote was 95 votes in favor, 25 against and 31 abstentions with many pro-government lawmakers turning their backs on their government's urgent demands to block the measure.  Now the bill will be reviewed again by the Constitution Commission since it was the subject of indications.

The decision is considered a historic step in the years-long fight of Chilean workers to change the Administrators of Pension Funds (AFP), a system established since 1980 by the Pinochet dictatorship, that changed the former universal pension system with private AFPs where each worker has an individual pension account.

"The current individual capitalization is contrary to Social Security and, under its individualistic conception based only on personal savings, it will not be possible to improve the pensions of our current compatriots," denounced the Chilean social movement No + AFP.

Social sectors ever since have been pushing to create "a new system of distribution, solidarity and with tripartite financing for workers, companies and the State, based on generally accepted Social Security principles that will replace the individual capitalization system of the AFP," the movement said on its website.