This project is a way to make pension funds saved by workers available for matters in which their use does not imply higher inflation, higher demand or higher consumption.”
Mario Marcel, Minister of Finance of Chile
The Labor Commission of the Chamber of Deputies in Chile approved in general this Tuesday by 11 votes in favor and two against, the Government’s bill that was presented with immediate discussion and that establishes a limited withdrawal of funds from the Administrator of Pension Fund (AFP) of Chile to pay debts for basic services and alimony.
The Minister of Finance, Mario Marcel, informed the deputies of the beneficiaries and volumes involved in the project. In potential beneficiaries of financial debt there is a universe of 3 million people, in debts of basic services one million people, in alimony debts 70,000 families. Regarding the benefit for debtors of housing loans, he said that it is more difficult to measure.
He stressed that “if one crosses these figures with balances in savings accounts, this could mean a use of 3,000 million dollars, that is a fifth of a withdrawal as has occurred so far” and that “the impact on interest rates and variable would be significantly lower.
He emphasized that “the effects on inflation, we estimate that they do not have because there is no consumption or spending involved, there is no pressure on the exchange rate and it does not have a greater fiscal short either.”
Among the details that he gave, he pointed out that it is contemplated that this focused and limited withdrawal of pension funds will aim first of all at the alimony situation, so that the debtor’s resources can be demanded and extracted from their pension funds.
“In this case, what is done is to have a permanent mechanism in which, when the actions to collect alimony are exhausted, the debtor’s pension funds can be required by the same procedure,” he said.
Secondly, a model similar to the New Zealand one is pointed to, “in which resources from pension funds can be advanced for the purchase of a first home,” explained Marcel.
The initiative establishes exceptional cases in which those who are affiliated with the AFPs are authorized to make withdrawals of their funds for up to 10% of the amount accumulated in their individual capitalization account, with a maximum of 150 Unidades de Fomento (UF) and a minimum of 35 UF, exclusively for the purposes indicated.
The proposal also contemplates a modification to the rules on collection of alimony, in order to be able to access debtors’ pension funds not only on an exceptional and transitory basis.