On 23 July, the Senate of the Chilean Parliament adopted a historic decision following the Chamber of Deputies, approving a bill that would allow citizens to withdraw up to 10% of the savings held in private pension funds to support the population in the context of the pandemic and the crisis caused by it.
According to the head of the Association of Private Pension Funds of Chile, Fernando Larraine, during the first two days 5.5 million citizens have applied for funds, which is about half of all those who make contributions today.
“More than 95% of those who applied, have applied for withdrawal of the entire authorized amount”, – he said in an interview with the newspaper “Tercer”. Given that Chileans still have almost a year to apply, the number of those who want to withdraw their savings may increase significantly, which means that pension funds will have to give citizens up to $20 billion.
The adoption of the law has already been described by many as the biggest defeat of President Sebastian Piñera’s government. The head of state did not veto it, although the possibility was talked about before the last one, but signed the document behind closed doors without making any statements as usual. The ceremony resulted in only a dry report of the press service about the accomplished fact, which, according to some analysts, may be the beginning of the end of the current Chilean accumulative pension system, which in many ways has become the key to successful economic development.