Economy

Chile's President Pinera seeks Constitutional Court help to head off pensions bill

President Sebastian Pinera intends to halt an opposition measure aimed at allowing citizens to draw down a second installment from their privately held pensions

Chile's President Sebastian Pinera is seen, during a meeting with to Colombia's President Ivan Duque at the presidential palace Cerro Castillo, in Vina del Mar, Chile. Photo: REUTERS/Rodrigo Garrido
  • Pinera said the legislation was unconstitutional since it implied a cost to the public purse that can only determined by the executive;
  • The bill’s supporters say it would help Chileans struggling to deal with the economic fallout from the coronavirus.

Chilean President Sebastian Pinera said on Sunday his government would appeal to the country’s Constitutional Court to halt an opposition measure aimed at allowing citizens to draw down a second installment from their privately held pensions.

Pinera said the legislation was unconstitutional since it implied a cost to the public purse that can only determined by the executive, and posed a “grave risk” to the future pensions of Chileans as well as offering another tax-free windfall to higher-income individuals who did not need it.

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“All authorities, and especially the president of the republic, have to be sensitive to the needs of citizens, and also responsible over the decisions they take and their future consequences,” the presidency said in a statement.

The bill’s supporters say it would help Chileans struggling to deal with the economic fallout from the coronavirus. They have criticized the government for an inadequate response.

The move to involve the country’s highest court is risky for the center-right Pinera government, already under fire for its aggressive handling of social protests over inequality that exploded last year and struggling to convince the electorate of its intention to fix the problems the protests raised.

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Pinera could refuse to sign the bill into law if it is approved by Congress, although that risks sparking public anger.

Pinera’s approval rating stands at 16%, according to pollsters Cadem, while Pamela Jiles, a leftist lawmaker representing an impoverished Santiago suburb who introduced the second withdrawal bill, is now touted as a possible candidate in next year’s presidential election with a 65% approval rating – the highest of any Chilean politician.

Chile’s congresswoman Pamela Jiles poses ahead of a congressional session to approve a second partial withdrawal of pension savings, amid the spread of the coronavirus disease (COVID-19), in Valparaiso, Chile November 10, 2020. Photo: REUTERS/Rodrigo Garrido

“The government has a unique capacity to unite the whole country, but against it,” Jorge Sharp, mayor of the port city of Valparaiso and member of the Broad Front leftist coalition, wrote on Twitter on Sunday evening.

The first bill providing for Chileans to tap 10% of their pensions sailed through Congress in July with cross-party backing, despite fierce opposition from the government.

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The latest bill has already been greenlighted by a large majority in the country’s lower house after governing Chile Vamos coalition lawmakers again ignored instructions to oppose it. It is due to be voted on by senators as early as this week.

Along with its Constitutional Court move, the Pinera government has introduced its own bill allowing a limited number of people to withdraw a second portion of their pensions.

The presidency pointed in its statement to a raft of measures it has announced to combat joblessness and hunger caused by the coronavirus pandemic.

It is also seeking to reform the Pension Fund Administrators system, a cornerstone of the country’s much-emulated free-market model, which has been heavily criticized for low payouts.

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