First modification:
Chilean deputies rejected the controversial project that sought to allow the early, massive and unconditional withdrawal of 10% of the country’s private pension funds. The Government, which was opposed, presented its own proposal that stipulated a limited withdrawal. The plan was also denied in the Chamber of Deputies.
A double rejection. The Chilean Chamber of Deputies denied the proposal of several deputies for a fifth early and unconditional withdrawal of 10% of the country’s private pensions, but also the government project that proposed a limited withdrawal.
The decision of the parliamentarians gives the Government of Gabriel Boric a bittersweet victory, since it had shown its resistance to the possibility that Chileans could take over their private pension funds in a massive way and without conditions.
However, he also saw his own more moderate project fall apart.
The debate lasted about eight hours in which the arguments on both proposals were heard.
The first obtained 70 votes in favor, 70 against and 12 abstentions. The second was rejected with 68 votes in favor, 83 against and one abstention.
DEBATE FUNDS WITHDRAWAL 📰| Eight hours of debate and more than 100 interventions for pension fund withdrawal projects.
👉 Most positions were due to current economic needs and the risk of deepening inflation.https://t.co/ljFO44Pa22
– Deputies and Deputies of Chile (@Camara_cl) April 19, 2022
The Government believed that it had the 78 positive votes necessary to approve the alternative withdrawal. However, several deputies from the ruling coalition disassociated themselves from the project.
“The same ones that approved in the Labor Commission, ended up rejecting in the Chamber, it is difficult to understand,” said Giorgio Jackson, minister of the General Secretariat of the Presidency, in charge of relations with Parliament.
Why was the government opposed to a universal withdrawal?
Before the vote, the Government of Gabriel Boric had presented its estimates on the fifth withdrawal of pensions, which it had classified as counterproductive.
As he assured, this would increase liquidity and negatively impact inflation, which could grow by 16% over 12 months in September.
“I think that the arguments that we put on the table were understood by the parliamentarians and I think that it was understood that this was a different scenario from the first withdrawal and the previous opportunities,” said Finance Minister Mario Marcel.
The minister had served in the past as president of the Central Bank; a position in which he had already opposed this type of withdrawal that marked the economic policy of the Government of Sebastián Piñera in times of pandemic.
In response, they presented an alternative bill in which it was stipulated that the money from said funds could only be used to pay debts and alimony.
What had happened in the past with the withdrawal of pensions?
During 2020 and 2021, at various times during the pandemic, these types of fund withdrawals were approved, seeking to counteract the critical economic situation of the middle class, dissatisfied with social aid.
However, these measures became one of the most questioned in the management of the pandemic in Chile. The Pension Fund Administrators (AFP), private entities responsible for managing said funds, disbursed more than 55,000 million dollars.
For many, these had a great effect on the inflation reached by the country in 2021, which closed at 7.2% and was the highest in 14 years.
The future of pension initiatives
The proposal for the fifth withdrawal was definitively discarded, it will be archived and it will not be possible to present it during the next year.
For its part, the Boric government could resort to a prerogative and take its project to the Senate, which grants it the fact that it is a presidential initiative.
An option to which the Executive has not yet referred. Marcel himself said at a press conference after the vote that it was an “eloquent” result and that the government would continue with its agenda.
“We will see if there is room to insist on some of these issues, but the most important thing is to focus on our long-term reform agenda,” the minister said.
The measures linked to the pension system in Chile are usually not exempt from controversy. Created during the period of the Augusto Pinochet dictatorship, it determines that workers must contribute 10% of their salary to the private funds managed by the AFPs.
Thus, this has been criticized on several occasions for providing very low pensions. Half of the contributors receive about 280 dollars a month in pension, according to data from the Sol Foundation.
With EFE and local media
#Chile #Chamber #Deputies #rejects #withdrawal #pension #funds