Chile: Lower House Approves Another Retirement of Pension Funds

"APPROVED, Chamber approves bill to allow members of the pension system, the early and voluntary withdrawal of part of the funds," announced the Lower House on Twitter after the initiative got 94 votes in favor (one more than necessary), 39 against and nine abstentions. To become law, the bill must now be approved by the Senate.

The bill presented by center-left legislators received the votes of 17 pro-government deputies, who ignored the government's warnings that it would be very unpopular to reject it amid the presidential and parliamentary election campaign on November 21.

Since September 2020 and amid the coronavirus pandemic, Congress approved three withdrawals of up to 10% each time of the funds accumulated in individual accounts in private pension fund administrators, companies criticized by Chileans for paying low pensions.

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The government stated that this fourth withdrawal is not justified because the worst of the economic crisis is over, and the measure may fuel inflation by putting into circulation the equivalent of between 12 and 16 billion dollars.

In addition, the government highlighted that job creation recovered and direct state aid to families was extended to 16 million out of 19 million Chileans via a bonus called "IFE" that gives an equivalent of 200 dollars per person, a measure criticized by the opposition as negligible considering Chile's cost of living. 

The above withdrawals were also approved thanks to pro-government votes that were added to those of the opposition.

In the first three withdrawals, Chilean workers withdrew a total of 50 billion dollars, according to the Superintendence of Pensions.

With these withdrawals, five million people, out of 11 million affiliates, have been left without retirement funds in these private administrators set up forcefully 40 years ago under the dictatorship of Augusto Pinochet (1973-1990).