Chile’s Senate Rejects Pension Withdrawal Bill, now to Vote on Pinera’s Plan B

RIO DE JANEIRO, BRAZIL – Chile’s Senate rejected an opposition-led coronavirus relief bill to give citizens a second opportunity to withdraw funds from their pensions, with lawmakers to vote later on Thursday, November 26th, on a similar bill put forward by President Sebastian Pinera.

Congress let Chileans withdraw up to 10% of their funds from Chile’s private pension system in July to ease the economic burden of the coronavirus lockdown, a measure that passed with cross-party backing despite opposition from the government. Lawmakers say a further drawdown opportunity is needed now, as the economy flounders and the pandemic rages on.

But the opposition measure fell three votes short of approval, as pro-government lawmakers rejected the bill over concerns about its constitutionality and impact on future pension payouts.

The Senate will vote on Pinera’s counter-proposal later this afternoon. That bill, if approved, will require additional votes before its eventual passage.

Both proposals authorize a second, 10% withdrawal of funds.

Pinera’s measure, introduced last week to counter the opposition-led bill, was initially more restrictive, taxing withdrawals, placing restrictions on who could access them and requiring them to be paid back.

However, some of those restrictions have since been pared back, and Pinera’s bill now closely resembles the opposition-led measure voted down by the Senate earlier on Thursday.

Pinera has long argued that early withdrawal from the system jeopardizes the long-term pensions of the poorest Chileans, offers a tax-free windfall to rich people who do not need it, and may not be legal under the constitution. His opponents say Chileans need economic help now.

Pinera introduced his bill last week after lawmakers, including some from his center-right Chile Vamos coalition, pushed ahead with the second withdrawal despite his concerns.