Money Coronavirus: Chileans have started to dip into their retirement savings

13:22  31 july  2020
13:22  31 july  2020 Source:   rfi.fr

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Chileans rushed Thursday to tap their retirement savings just days after the government permitted people to raid their pensions to ease the economic pain caused by the coronavirus pandemic. Under a law approved last week, Chileans can access up to 10% from their mandatory pensions over the

Key retirement -related provisions are included in the Coronavirus Aid, Relief, and Economic Security Act or the “CARES Act.” “I’m not a big fan of this part, because it’s encouraging people to dip into their retirement accounts early,” said David Certner, AARP’s legislative counsel and legislative policy

Des habitants de Santiago font la queue le 30 juillet pour débuter la préocédure leur permettant de puiser jusqu'à 10 % de leur épargne retraite pour faire face à la crise économique due au coronavirus. © MARTIN BERNETTI / AFP Residents of Santiago line up on July 30 to start the procedure allowing them to draw up to 10% of their retirement savings to make in the face of the economic crisis caused by the coronavirus.

Since Thursday, July 30, nearly 11 million Chileans can draw on their mandatory retirement savings, to cope with the economic consequences of the pandemic, which has lasted since March in the country. This very popular measure was adopted on a razor's edge in Congress, against the advice of the right-wing government in power, led by Sebastian Piñera. Some in Chile hope this will lead to the end of the funded pension system inherited from the Pinochet dictatorship.

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Half of americans say coronavirus has impacted them financially. Most likely to dip into their retirement savings were millennials One in five millennials with a retirement savings account said they had used some to supplement their income since the outbreak, compared with just

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A majority of residents have already taken steps to tap into this retirement savings.

With our correspondent in Santiago, Justine Fontaine

In front of the offices of this private pension fund, in the historic center of the Chilean capital, dozens of people, all masked, came to request information for to recover part of their individual and compulsory retirement savings .

This is the case of Gary Lozada, 41, a Peruvian unemployed since April: “It's very difficult at the moment, I'm surviving with my unemployment benefits. Small contributors like him will be able to withdraw a very large part of their retirement savings, around 60% in his case. Gary will use it for daily expenses.

Low pensions

Others, who have contributed longer, like Manuel Toledo, will be able to withdraw around 10% of their retirement savings. This Chilean in his fifties will do all the paperwork via the Internet: "I will use it to pay debts, which have only grown because of the pandemic. Almost 90% will go to repay my loans and bills. It takes a load off me!

According to several polls, more than 8 out of 10 Chileans are in favor of this reform. Not to mention that the current pension system, inherited from the dictatorship of General Pinochet, is very unpopular today, because the pensions paid are extremely low.

See also: Coronavirus: in Chile, the Assembly votes the right to draw on their retirement savings

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