Chile: Lawmakers Approve Withdrawal of Pension Funds

Chile's Chamber of Deputies Wednesday passed a historic bill that will allow citizens to withdraw 10 percent of their pension funds to deal with the effects of the pandemic.

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The bill was approved with 95 votes in favor, 36 against, and 22 abstentions. For its approval, 93 votes were required.

"This is an unprecedented victory over Sebastian Piñera's administration, which has been resistant to use AFP funds despite the economic crisis," lawmaker Matias Walker said.

The law allows citizens to withdraw their funds from the Pension Fund Administrators (AFP) without being subject to tax.  The next step will be for the Senate to approve the proposal.

"The bill allows affiliates to withdraw up to 10 percent of the funds accumulated in their individual accounts and establishes a maximum withdrawal amount of US$5,477 and a minimum amount of US$1,279," local outlet Meganoticias explained.

"However, the Chamber did not approve the creation of a Collective Solidarity Pension Fund, which would be in charge of the financing of the pension supplements that are needed after the withdrawals," it added.

As a result, the Senate must establish a mechanism to return the funds to be withdrawn.