Chilean Chamber of Deputies rejects a fourth pension withdrawal

The Chilean Chamber of Deputies rejected the controversial bill that sought to authorize people to make a fourth early withdrawal of 10% of their pension funds, as the necessary quorum of votes was not achieved for the measure to go ahead.

The approval of the project, resisted by the government, required a three-fifths majority, which means 93 votes in favor by the deputies; However, only 89 votes in favor were obtained, 29 against and 8 abstentions, so the initiative was rejected.

The project to approve a fourth withdrawal was born in the Chamber of Deputies itself, where it was approved at the end of last September by 94 votes in favor. However, in its second legislative process, in the Senate, in November, it was rejected for lack of a quorum due to the absence of only one more vote in favor.

After this rejection, the initiative passed to the Mixed Commission to try to iron out the rough spots between the positions of the two Chambers and returned this day to the Plenary of Deputies, where the absence from the seats of several legislators influenced in not reaching the necessary quorum of 93 votes.

At least seven deputies who at the time promoted the initiative were not present in the room today because they had permission to be absent for different reasons, although a permission that was not of a constitutional nature, so the quorum that was required to approve the measure was kept up.

One of those who was going to be absent but suspended his permission to attend was the leftist deputy and presidential candidate Gabriel Boric, who said that “today we are voting in favor of the fourth retirement because we know that those who did not come to vote today will have to answer for their actions”.

Others, such as the socialist Marcos Ilabaca, blamed the rejection on “a great trick of the Government”, since the Executive recently put immediate discussion on the project since “they knew that today the votes were not there”, in his words.

Deputy Pamela Jiles, for her part, announced that she will present an initiative so that citizens can withdraw 100% of their pension funds.

From the Government, the Minister Secretary General of the Presidency, Juan José Ossa, valued that the fourth 10% “has not continued to advance” because “going to the withdrawal of pension funds is harmful in the medium and long term.”

The Minister of Finance, Rodrigo Cerda, pointed out that although the first and second withdrawals “were approved in the Chamber (of Deputies) with 130 and 122 votes, today there is a very considerable change in the number of votes”, which in his opinion means that “technical arguments” about the detriment to future pensions of these withdrawals “are permeating.”

Since the arrival of COVID-19 Three withdrawals of 10% from pension funds have been approved to alleviate the economic damage caused by the health crisis.

The first was approved more than a year ago and so far it has involved a disbursement of more than US $ 50,000 million for entities that manage these monies, the Pension Fund Administrators (AFP).

Although the approval of all of them was controversial and required a vote in favor of pro-government legislators despite the government’s opposite position, the initiative to carry out a fourth withdrawal encountered more opposition.

In addition, economic actors such as the Central Bank itself warned of the consequences that a fourth withdrawal could have, with “extremely serious” effects, considering that the greater amount of money in circulation could overheat the economy and produce higher inflation and severe financial imbalances.

The pension system of Chile, devised by José Piñera, brother of the current president, and established during the dictatorship of Augusto Pinochet (1973-1990), is a pioneer in individual capitalization and requires each worker to contribute 10% per month of their salary to a fund managed by private companies, the AFPs.

In recent years it has been widely criticized for the scarce pensions it grants, with half of Chilean taxpayers receiving less than 215,000 pesos (US $ 280) a month in pension, according to data from the Fundación Sol, and its reform was one of the claims of the Chileans who staged the protests of 2010.