The regulators put numbers to the project that allows the withdrawal of 10% of the pension funds that is discussed in the Chamber of Deputies and, at the same time, they broke down the effects that a measure of this magnitude can have on the capital market and the same pensions.
At the request of the Minister of Finance, Ignacio Briones, the Senate Finance Committee received members of the Financial Stability Council on Monday, to learn about the impact of this initiative, which has only been analyzed in the Chamber by the Constitution for its quality of constitutional reform.
It was the Superintendent of Pensions, Osvaldo Macías, who addressed the most direct consequences, noting that according to accumulated funds, the average withdrawal would be $ 1,300,000 and the median (just in the middle) $ 1,000,000. Within this universe there are differences, since once the retirement was approved, 27% of the contributors would end up extracting all their savings considering the floor of 35 UF ($ 992,000), of them 31% would be women and 23%, men.
Meanwhile, 41% have a balance to withdraw the 35 UF, and 25% effectively if they withdraw, will comply with the original idea of removing 10%. Very few, only 7% of affiliates could take the ceiling of 150 UF ($ 4,300,000), of them, 4% are women and 9%, men.
If all the contributors used this possibility of taking out their 10% it would imply an extraction of US $ 19,640 million, which should be settled in the financial market. Of these, the highest percentage would correspond to fund C, with US $ 6,781 million, equivalent to 35% of what was saved in that fund.
Regarding affiliates, those between 45 and 55 years of age would be able to obtain the highest amount, corresponding to 28% of the total, that is, US $ 5,482 million, followed by 23% of people between 35 and 45 years of age. Affiliates under the age of 25 would withdraw only 4% of the funds, as well as the oldest, over 65 years (5%).
Macías explained that the withdrawal would not be neutral, but would affect future pensions between 5% and 12%. She simulated several scenarios with a base salary of $ 500,000, and if she retired in the first 5 years, 20 years before retirement or 5 years before pensions, with 4% return. The first, for men and women with 100% contributions, showed that in the first case, both could withdraw 24% of their fund, but this would cause the woman’s pension to drop by 5.7% (versus 5.2%). of men), and the drop would be 9.1% if it were done when he was 5 years before his retirement age compared to the 6.9% decrease in the male pension.
But if we consider a more real example, with the average contribution density (total monthly contributions), the scenario is worse. This is how a woman who has contributed for 5 years with 46% density could see her final pension affected by 12.3% (versus -9.2% of the man’s pension with 57% contribution density), since With the project, it will be withdrawing 52% of the contribution. “There is a very significant impact, more marked in women, and it would be more dramatic for people with lower incomes. This would be a very hard blow to pensions, very large, because they would drop between 5% and 12% ”, observed the superintendent.
In fact, he stressed that this project goes in the opposite direction to what has been declared in recent years in the sense of introducing improvements to the system to improve pensions. “A woman who has been contributing 100% for 5 years, if she withdraws, will be equal to 16 months of contribution, it is like introducing an artificial lagoon of 16 months; and in other cases we are talking about 1 or 2 years of contribution. We would be dealing a blow to the pension gaps, deepening a problem that is complex, “stressed the superintendent.
For their part, the Financial Market Commission (CMF) and the Central Bank (BC) focused on the impact on the capital market.
The president of the latter, Mario Marcel, recalled that whatever the pension system, the funds are invested in different instruments in the world, “there is none that has the resources for future pensions kept in a current account or in a vault. They are always somewhere invested. ”
Therefore, he admitted that any change that allows a massive withdrawal has macroeconomic and financial effects, in potential impact on domestic demand, balance of payments, and adjustments of agents. Whatever the pension system, if the possibility of an extraordinary turn is generated that is not for pensions, it must have some financial implication, “he stressed.
In fact, he recalled that the most similar case is what happened in Peru, which allowed the withdrawal of up to 25% of the funds whose assets represent 20% of GDP (Gross Domestic Product) while in Chile they reach 83% of GDP. . “Although the financial markets in Chile are deeper, it could be assumed that the impact will be more important than in Peru. The BC (in Peru) helped cushion the effect with repos, but here in Chile the BC does not have that power because it can only carry out this type of operations with banks. ”
Likewise, the CMF warned that the sale of AFP assets would have an effect on interest rates, however, they did not provide simulations quantifying the effect.
One of the most emblematic cases due to the resources presented to the courts for the withdrawal of social security funds followed a reverse process to that of the professor from Antofagasta, María Angélica Ojeda, whose request to be able to withdraw her funds from AFP Cuprum was accepted by the Court of Appeals of said city. Thus, in the case of the Punta Arenas health worker, Beatriz Valenzuela, the legal action was rejected by the Court of Appeals of that city.
The resolution indicates that Decree Law 3,500, which created the individual capitalization system, establishes that “those affiliated to the pension system cannot withdraw their pension funds accumulated in the individual capitalization accounts, except in the form of a pension, which it can be of old age, disability or survival ”.