SANTIAGO (Reuters) – Chile´s Congress on Friday approved by a large majority a move to allow citizens to withdraw a third tranche of their privately held pensions to assuage economic hardship wrought by the coronavirus pandemic.
Lawmakers in the country´s lower house approved the measure with 119 to 17, with 3 abstentions, prompting cheering and applause. Senators greenlighted the move earlier this week.
Previously, Congress approved two withdrawals of 10% from pension pots in July and December, with the help of members of President Sebastian Pinera’s Chile Vamos coalition who defied instructions to vote the initiatives down.
The government has long opposed raids on the pensions which represent the backbone of the free market system and base for its capital markets, arguing citizens should rely on its financial aid packages instead.
It has also warned that a third drawdown would increase the number of citizens without pensions from 3 million to 5 million, and payouts will drop by an average of 29 percent.
Proponents say it is necessary because the government’s emergency support is patchily distributed and insufficient.
President Pinera must now decide how to respond to the bill`s passing. He faces threats of fresh social protests like the ones that ripped through the country in October 2019 and still simmer, and warnings by unions they could launch a general strike in sympathy with hard-pressed Chileans if he fails to sign it into law.
On Tuesday the government lodged an appeal due to be heard next week with the country’s constitutional court to block the move, arguing it was unconstitutional since it implied a cost to the public purse that can only determined by the executive.
On Friday, members of the National Renovation party that form part of the ruling coalition wrote an open letter to Pinera urging him to abandon his bid to block the legislation.
“Of course, the third withdrawal is not what we would want to be approving, but in times of emergency, in a pandemic that gives no ground, exceptional measures are needed,” the 15 lawmakers wrote.
(Reporting by Aislinn Laing; Editing by David Gregorio)