Chile begins the third pandemic pension withdrawal: up to US$19 billion may be withdrawn

RIO DE JANEIRO, BRAZIL – Chileans began this Monday the process to withdraw, for the third time since the beginning of the pandemic, their pension savings, a measure proposed to alleviate the crisis that has generated the covid-19 and that may involve the outflow of US$19 billion from the funds.

Chile gave the green light a week ago to an initiative that allows the withdrawal of 10% of the individual pension savings accounts, mandatory contribution for workers, and managed by the Pension Fund Administrators (AFP), private companies.

According to local media, more than half a million Chileans had already submitted their request to withdraw the amount from their account in less than an hour after the deadline opened.

According to data from the AFP Association, this procedure, which will be carried out electronically during the first two weeks, could benefit around 10 million contributors who will receive the money in their accounts in less than 15 days.

According to the Superintendency of Pensions, this is the third withdrawal approved by Chile after those of July and December, which between them meant a disbursement of more than 37 billion dollars for the private funds.

BONUS FOR PEOPLE WITHOUT FUNDS

According to the regulator, around 3 million pensioners no longer had savings for a third 10% withdrawal in February due to the two previous withdrawals.

This was one of the arguments put forward by the Government to oppose the project head-on and the reason why they introduced a bill, which will begin to be debated this Monday in Parliament and which seeks to provide a bonus of 200,000 pesos (US$280) for those who have run out of funds.

The withdrawals generate controversy: while the detractors point out that they are a way of mortgaging the contributors’ future, the defenders believe that the pandemic is lasting longer than expected and that the US$18 billion in aid announced by the Government “are not reaching the people”.

Despite being one of the countries with one of the most vaccinated populations in the world, Chile is going through the worst moment of the second wave of covid-19 that forced the imposition of massive quarantines and is putting an end to thousands of businesses that had managed to save themselves from the 2020 encirclement, a year in which the gross domestic product (GDP) suffered a 5.8% drop.

The Chilean pension model, implemented by Augusto Pinochet’s (1973-1990) dictatorship and pioneer in the region in establishing individual capitalization, is widely criticized for the derisory pensions it offers and the millionaire profits of the private companies that manage the funds.

Source: efe