Insurance associations ask politicians to reject fourth pension withdrawal

pension withdrawal

Insurance associations have requested international intervention in a possible fourth AFP pension withdrawal. According to letters they have sent, the withdrawal could be harmful to Chileans, especially women. It could also have an impact on investments in Chile.

To deal with the economic disruption of the coronavirus pandemic and related health measures, Chile’s government has thus far allowed three withdrawals from its AFP pension system. It is set to vote on a bill authorizing a fourth on Sept. 1. International interests object.

The American Council of Life Insurers (ACLI) has sent a letter asking the president of the United States and the G20 to intervene with respect to a possible fourth AFP pension withdrawal in Chile. The ACLI’s letter claims that a fourth withdrawal could “further damage the Chilean people, and especially women, who are trying to ensure the future of their families.”

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This isn’t the only request for intervention from an insurance association. As reported by La Tercera, the CEO of the Global Federation of Insurance Associations, Don Forgeron, issued a similar letter to the president of the Financial Stability Board, an international body that monitors and makes recommendations about the global financial system, and to the president of the Bank of Italy, where the current presidency of the G20 is located. There is also a claim that a fourth withdrawal could potentially interfere with “long-term investments in Chile and their stability.”

The insurance associations are therefore asking Chilean politicians to reject the bill and to “take action to protect the safety of the clients’ pensions.”

The idea of a fourth withdrawal has also been criticized within Chile. Several politicians have already expressly rejected the idea. The newly-installed president of the Senate, Ximena Rincón, is one of them, saying that “a fourth withdrawal isn’t the right way to go,” and that “this wouldn’t benefit the people,” adding that the right measure is to continue with the State Emergency Family Fund (IFE), a benefit given to 90 percent of the most vulnerable families in Chile by the government every month until December of this year (the amount depends on how many family members there are in each home, but it ranges from CLP$177,000 (US$224) to CLP$887,000 (US$1,127)).

Chile presidential candidates Sebastián Sichel, Yasna Provoste, and Gabriel Boric have also spoken out against a fourth withdrawal, provided the IFE remains available.

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