Chilean bill to allow for fourth pension withdrawal advances in Congress

September 29, 2021

SANTIAGO (Reuters) – Chile’s lower congressional chamber on Tuesday approved a bill that would allow citizens to make a fourth withdrawal from their pension funds, and sent it to the Senate for a vote, despite opposition from the government.

The initiative passed with 94 votes in favor, just one more than the minimum needed, while 39 lawmakers voted against and 9 abstained.

Chile’s government and the Central Bank have warned that passing the bill would negatively affect the economy, as Chileans further deplete funds meant for retirement.

Before the pandemic, Chileans were not allowed to tap into their pension funds until their actual retirement. But the economic damage done by the coronavirus pandemic since March 2020 led Chile’s opposition to push for the withdrawals in order to get cash into the hands of citizens.

In total, Chileans have withdrawn some $50 billion from their pension funds since the first law was passed.

“The funds belong to the workers, it’s them who will decide over a period of two years if they exercise this right (to withdrawal),” said Matias Walker, a lawmaker from the Christian Democratic party.

Since July 2020, Congress has allowed for three withdrawals, each allowing citizens to cash in 10% of their pension fund. This fourth withdrawal would also allow for an additional 10%.

(Reporting by Fabian Cambero; editing by Grant McCool)

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