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SANTIAGO (Reuters) – An association of U.S. businesses in Chile warned on Tuesday that a proposal to allow Chileans to withdraw money from their pension funds for the fourth time since the start of the coronavirus pandemic could seriously harm the country’s business climate.
Chile’s lower house of Congress approved the bill late last month, but it faces more resistance in the Senate, where right-wing lawmakers allied with President Sebastian Pinera’s administration opposed it.
“This new withdrawal from pensions, and in particular life annuities, … seriously damages Chile’s image as an attractive destination for foreign investment,” the Chilean-North American Chamber of Commerce said in a statement.
Chile’s government and central bank have also warned that a fourth withdrawal would hurt the pension system, hitting the long-term poor hardest. Opposition lawmakers, however, say money is a lifeline for many Chileans suffering from the economic impacts of the coronavirus pandemic.
Before the pandemic, Chileans were widely prohibited from drawing on their pension funds until retirement age. But the economic effects of the pandemic since March 2020 have led Congress to approve three withdrawals, each allowing citizens to cash out 10% of their pension fund.
This fourth withdrawal would allow an additional 10%.
Amcham and Chilean financial regulators were particularly concerned about a clause that would allow retirees who have purchased an annuity to obtain an advance of up to 10% of their funds from insurance companies.
“The approval of a bill of these characteristics seriously undermines confidence in Chilean institutions, affecting foreign investment and contravening the free trade agreements signed for Chile,” Amcham said.
The Chilean financial regulator warned earlier that the terms of the bill could potentially render nine insurers that deal in annuities insolvent.
(Reporting by Fabian Cambero and Dave Sherwood; Editing by Cynthia Osterman)
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