CHILE: ​Another go at pensions?

CHILE - In Brief 04 Mar 2021 by Robert Funk

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Exactly a year after the first case of Covid-19 was confirmed in Chile, some eight months after Congress approved the first 10% withdrawal from private pensions (AFP), and four months after it approved the second withdrawal, President Sebastián Piñera is trying to get ahead of the game by proposing a reform to the Chilean pension system. He is trying to avoid the approval of a third withdrawal of 10%.The push for a third law that would allow another withdrawal is being pushed, again, by Pamela Jiles, a populist deputy with presidential ambitions, who calls her followers her ‘grandchildren’. Although her methods are unorthodox and her politics are irresponsible, she has garnered a large following among those who feel that politicians do not listen to the people. This following is scaring more traditional politicians such as Ximena Rincon, the Christian Democrats’ presidential candidate, into supporting her reckless proposals. It is clear that Jiles and her supporters are as eager to chip away at the AFP system until it crumbles, as they are to access extra income in an emergency. Back in December Jiles declared “It’s clear that the collapse of the AFP system is under way”. Without better public policies to bolster incomes for those feeling the economic effects of the pandemic, and more reasonable solution to AFPs’ real problems, Jiles’ and others’ argument will continue to gain traction. The government had been negotiating for months with the opposition parties, but finally lost patience.Piñera’s proposal has several points. First, it would increase worker contributions by 6%, half of which would go to workers’ personal accounts and half to help finance public pensions,...