Santiago de Chile, 21 Mar The Chilean Chamber of Deputies approved this Monday the idea of discussing a new withdrawal of 10% of pension funds, a controversial measure that was approved three times during the covid-19 pandemic. Admissibility of the initiative was approved by 117 votes in favour and 26 against after a similar proposal was rejected in December. This is a project entered by seven left-wing deputies that seeks to alleviate the decimated domestic economies after the health crisis by allowing all contributors to withdraw one-tenth of their pensions, managed by private funds with compulsory contributions. Since the arrival of covid-19, three additional withdrawals of 10% have been approved from pension funds, which have so far involved a disbursement of more than 50 billion dollars to entities that manage these monies, the Pension Fund Administrators (AFP). The approval of the withdrawals was controversial on all three occasions, although they were eventually approved even with the support of right-wing lawmakers, who were more reluctant at the start. The idea of approving this project is not feasible after a similar initiative was rejected in December because of the possible consequences it could have on the economy, considering that withdrawals increase the amount of working capital and could entail higher inflation. Chile is experiencing a sharp increase in prices, with a 7.8% increase in CPI in the last 12 months, which has led the Central Bank to raise the benchmark interest rate by 150 points, from 4% to 5.5%, its highest level since 2011. Chile's pension system, 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 AFP. In recent years it has been widely criticized for the scarce pensions it provides, with half of Chilean taxpayers receiving less than 215,000 pesos ($280) per month of pension, according to data from the Sol Foundation.
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