SANTIAGO – Lawmakers in Chile’s lower house have approved a bill to allow citizens to withdraw up to 10% from private pension funds, dealing a blow to President Sebastian Pinera’s government.
Deputies gathered in the Chilean Congress in the coastal city of Valparaiso cheered and sang the national anthem after the result was announced on Wednesday.
The vote was 95-36, with 22 abstentions. The bill was backed by 13 members of Pinera’s ruling coalition.
Finance Minister Ignacio Briones walked out of the chamber as the voting took place. Interior Minister Gonzalo Blumel said afterwards he hoped the Senate would “correct this mistake.”
President Piñera had on Tuesday announced the expansion of a plan to help the middle class in a bid to block a legal reform that allows people to partially withdraw their pension funds.
“Our government has developed a strengthened plan to protect the middle class … that requires an enormous fiscal effort,” Piñera said during the announcement.
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However, opposition lawmakers managed to advance a project that allows people to withdraw 10% of the funds that people have in the questioned Pension Fund Administrators (AFP).
At the beginning of the month, the government launched a plan that included a soft loan, mortgage loan deferment, rental subsidy, and increased financing for higher education, which was deemed insufficient by its adversaries.
The expansion includes a direct payment bonus for the equivalent of about $ 630 to employed, unemployed, suspended or self-employed middle-class people, said the president.
Piñera affirmed that aid to the population “cannot be at the cost of reducing their pension savings” and assured that his government has worked to improve pensions with various projects.
He also promised to advance with “urgency and responsibility” in a profound reform of the pension system, for which he will initiate a dialogue with the various actors in the country.
AFPs manage assets of more than 200,000 million dollars.
The pension system, a model praised and imitated by other countries, has been the target of harsh internal criticism due to the low pensions they pay to members and caused a strong protest movement for their elimination.