ECONOMY

Lower House Approves Withdrawal of Pension Funds in Historic Vote

SANTIAGO – Chile’s lower house of Congress has approved a bill that would allow Chileans to withdraw 10 percent of their pension (AFP) funds during the economic crisis. After an intense debate, the opposition managed to secure enough votes to pass the bill on to the Constitutional Commission. Shortly after the vote, people reported that AFP websites were crashing.

After a long day of debating, the Chile’s lower house of Congress has approved a bill that would allow Chileans who are suffering from economic losses due to the coronavirus pandemic to withdraw part of their pension funds. The opposition, which had been pushing for the bill for several weeks, needed 93 votes and managed to get 95.

For the Piñera administration, the approval is a heavy blow and a sign that not only opposition sectors consider the emergency packages presented so far insufficient. Shortly after the bill’s  approval, several pension fund websites collapsed due to the high number of visitors they received.

The bill would allow pension holders to withdraw up to 10 percent of their funds, from a minimum of USD$1,200 up to a maximum of USD$5,400, and people with less than USD$1,200 in their pension funds would be able to withdraw all their funds. The bill would also create a compensation fund, with employers and the State contributing to a partial or full reimbursement of the withdrawn funds.

In the days ahead of the vote, the debate was no longer about whether withdrawing 10 percent of pension funds during an economic crisis was a good idea. Instead, it focused on the entire pension system itself and even went as far as whether to approve a new Constitution in October. The Chilean AFP system is one of the most controversial in the world and is seen by many as the symbol of neoliberalism. During the social protests in 2019, one of the main demands of protesters was an end to the system.

The government opposition, in recent months lacking strength and unity on certain important topics, celebrated the victory as if they had won an election. After approving the bill, deputies called the victory “historic” and said that this was the first step to end a system of abuses and that Chileans should be celebrating this alleviation to their dire circumstances.

Before the vote, right-wing party UDI emphasized that this was about ideological matters. Still, four of its lower house members, along with nine from coalition partner Renovación Nacional, voted in favor. Shortly after the vote, other UDI members said that they would ask President Piñera to intervene to stop the further advance of the bill. In the meantime, the bill continues on to the Constitutional Commission for a further vote.

 

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