Work

Early pension withdrawals in Chile during the pandemic

Year: 2023

Type: article

Abstract: At the onset of the Covid-19 crisis, and with one of the largest and best-funded defined contribution programs in Latin America, Chile held over USD $200 bn in assets (or more than 80% of GDP). Reacting to populist pressures during the pandemic, however, the Congress gave non-retired participants three separate opportunities to tap into their retirement accounts, leaving some 4.2 million participants with zero retirement savings and draining around $50 bn from the system. This paper explores several hypotheses regarding why people withdrew their pension money early, and it also presents evidence regarding the likely impact of this short-term policy on long-term retirement wellbeing. We conclude with lessons for global policymakers seeking to protect pension assets critical for retirement security.

Source: Journal of Pensions Economics and Finance

DOI: 10.1017/s1474747223000112

Authors: Olga M. Fuentes, Olivia S. Mitchell, Félix Villatoro

Institutions: World Bank Group, University of Pennsylvania, Adolfo Ibáñez University

Language: English

Topic: Financial Literacy, Pension, Retirement Analysis

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Good health and well-being

Open Access status: hybrid

Estimated APC paid: $3,255