For four decades, Chile has been a laboratory for pension reform. Its 1980s overhaul, based on individual capitalization, transformed retirement saving across Latin America. Mandatory contributions, privately managed by pension administrators (AFPs), built one of the region’s deepest capital markets and turned Santiago, Chile’s capital city, into a regional financial hub. Sovereign bonds were sought after, IPOs plentiful, and foreign investors saw Chile as a model of modernity.
That prestige has since faded. Low self-financed replacement rates — a median of 17% between 2015 and 2022 — left workers dissatisfied. Distrust of AFPs, often accused of charging high fees for middling returns, has grown. Then came the pandemic, when Chile’s Congress authorised three extraordinary withdrawals. More than $50 billion drained out between 2020 and 2021 — representing over 20% of the individual pension funds accumulated by 2019 and sixteen percent of Chile’s 2022 GDP. For households,
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