Fourth partial withdrawal of pension savings in Chile suffers setback in Senate

The bill that allows a fourth partial withdrawal of savings in private pension funds suffered a setback when it was rejected by the Chilean Senate, which will lead to a mediation instance with the Chamber of Deputies.

Senators declined to study the proposal with 24 votes in favor and 15 against, which did not meet the two-thirds required to advance.

“In the mixed commission I have no doubt that we will achieve a majority to approve this fourth withdrawal”Said the socialist senator Alfonso de Urresti after the vote.

The promoters of the project argue that the withdrawals, of 10% each, help to counteract the economic impact on families due to the coronavirus pandemic, since they consider the support measures implemented by the government insufficient.

However, the Central Bank has warned that a new withdrawal could lead to further overheating of the economy, higher inflation and severe financial imbalances.

In addition, the governing body said in a recent report that the main risk to financial stability comes from new forced liquidations of assets, such as those that the AFPs should do to comply with the return of money.

The Chilean system of private pension funds has been praised abroad, but criticized domestically for the low payments it provides to members.