A little more than four years after the constitutional reform that authorized the first partial withdrawal of pension funds in Chile, the impact is still evident in the pension savings portfolios. According to the Pension Fund Administrators Association (AAFP), pension funds remain below the levels they had in July 2020, when the constitutional change took effect.
At the end of that month, the AFPs managed assets amounting to 214 trillion Chilean pesos (227.3 billion dollars), as stated in a press release. Since then, the system has not been able to return to that figure in any month.
Moreover, by July 2024, the accumulated AUM stood at 177.5 trillion pesos (188.1 billion dollars), which is 17% below the level of pension portfolios held four years ago, according to a study by the Ciedess research center.
In this context, the entity—created by the Chilean Chamber of Construction (CChC), one of the controllers of AFP Habitat—highlighted that the current value of pension funds is equivalent to 82.8% of what was accumulated before the withdrawals.
The deterioration is also evident in relation to the broader economy. Ciedess figures show that the resources managed by the AFPs represented 83% of Chile’s GDP in July 2020, while four years later, that figure had fallen to 62%, marking a 21 percentage point drop in relation to the local GDP.
In total, the three pension fund withdrawals amounted to 44.256 billion dollars, according to the latest data from the Pension Superintendency, involving 28.8 million payment transactions.
Since the third withdrawal window opened in 2021, there have been several attempts to authorize another withdrawal. Last week, Chile’s Chamber of Deputies’ Constitution Commission rejected the latest parliamentary motions proposing new withdrawals, adding to three previous proposals that had already been turned down by the Chilean Congress.
“It is important to clarify that the only way to recover the withdrawn pension funds managed by the AFPs is by replenishing or reintegrating these resources and adding the returns they would have generated from the moment of each withdrawal until the present. As we know, this has not happened, and therefore, the recovery of the fund’s value has not occurred,” explained Rodrigo Gutiérrez, general manager of Ciedess, in the press release.
In this regard, the executive pointed out that “while the third withdrawal included an additional contribution option for this purpose, in practice, its implementation has been almost negligible, and therefore, its intended effect has not been realized.”
