Chile’s Boric proposes restricted pension withdrawals, citing inflation

SANTIAGO (Reuters) -A brand new pension withdrawal in Chile was voted down by a congressional committee Tuesday night time after President Gabriel Boric submitted a competing proposal hours earlier that cleared a vote in a separate committee.

Chile has resorted to permitting early pension withdrawals to assist residents take care of the financial fallout from the COVID-19 pandemic. Three withdrawals of as much as 10% of a employee’s pension funds have been authorized since July 2020. A fourth was voted down in December.

Boric’s authorities had opposed a brand new withdrawal of 10%, saying it might pump an excessive amount of cash into an financial system already battling spiraling inflation.

Then, hours earlier than the scheduled vote, Boric’s authorities launched a separate invoice that might permit withdrawals solely to repay money owed. This measure, the federal government says, would mitigate inflationary results.

“It’s a approach of creating pension funds saved by employees out there for issues through which their use doesn’t suggest increased inflation, increased demand or increased consumption,” Finance Minister Mario Marcel instructed reporters.

The federal government’s new proposal would additionally cap withdrawals at 10%, however restricts entry to pension funds for alimony funds, mortgages and different money owed. The invoice additionally bolsters unemployment insurance coverage.

Each payments had been debated concurrently, with Boric’s proposal clearing the committee first. Some legislators in favor of a blanket 10% withdrawal argued that the federal government should not have a say in how individuals use their pension funds.

Regardless of the committee votes, each payments will face a full vote within the decrease home, the place the unrestricted withdrawal can be anticipated to be voted down.

Though Boric had supported the 4 earlier withdrawals, chatting with reporters, he stated a brand new withdrawal with out limits would “deeply harm the neediest” by spurring inflation and decreasing the worth of their funds.

“We predict (this invoice) is an alternate that each helps households get forward in powerful occasions and can be accountable,” Boric stated.

(Reporting by Fabian Cambero, Natalia Ramos and Alexander Villegas; Writing by Alexander Villegas; Modifying by Aurora Ellis and Leslie Adler)