Chilean Congress Passes Pension Fund Withdrawal Bill

RIO DE JANEIRO, BRAZIL – The Chilean Chamber of Deputies passed a bill that allows for the exceptional withdrawal of ten percent of pension funds due to the coronavirus pandemic.

Legislators endorsed the modifications introduced by the Senate and the bill is set to be enacted by President Sebastián Piñera – who was dealt a heavy political blow – within the next 30 days.

The initiative, promoted by the opposition to Piñera’s government given the delay in delivering aid to the middle classes to tackle the economic crisis after more than four months of semi-stagnation by the coronavirus, was approved by a resounding margin of 116 votes in favor, 18 against and five abstentions in the final vote in the Chamber of Deputies.

The initiative, proposed in the context of the crisis created by the pandemic, allows for a minimum withdrawal of one million Chilean pesos (US$1,300) and a maximum of 4.3 million pesos (US$5,600).

If ten percent of the amount withdrawn is less than one million pesos, members may withdraw money until that amount is reached, and if the total amount accumulated in their individual capitalization account is less than that amount, the funds may be withdrawn in full.

The law allows members of the private pension system to withdraw funds, including beneficiaries of an old-age, disability, or ‘survivor’ pension, according to the Chilean news agency UNO.

The withdrawal can be made in two installments divided into a first of 50 percent of the amount, within a maximum of ten working days, once the application is submitted to the AFP (Chilean Pension system). The remaining 50 percent will be delivered within a maximum period of 30 working days from the first disbursement.

Although Sebastián Piñera is expected to promulgate the initiative, the president can veto it or appeal to the Constitutional Court if he so wishes.

The bill has triggered a major crisis in the Chilean government, as it was passed with the vote of several government legislators, while the progressive parties describe it as “historic” because they believe it could mark the beginning of a profound change in the country’s pension system, based on mandatory individual savings managed by private companies.

Chile is now close to 340,000 coronavirus cases, after adding over 2,000 in the past 24 hours, a high figure that nevertheless reflects a slowdown in the infection curve.

The Ministry of Health reported on Thursday that 2,371 new cases and 116 deaths were recorded the preceding day, totaling 338,759 infections and 8,838 deaths.

Source: infobae