Description

During the COVID-19 pandemic, Chile enacted three exceptional laws to allow withdrawals from the affiliates’ pension accounts. We analyse the impact of these withdrawals on the pension savings and projected future retirement income of the individual affiliates and their households. We document heterogeneous withdrawal behaviors among income levels, with lower income households using up a higher percentage of their retirement savings. Additionally, we simulate the workers’ contributions to retirement, showing an average reduction of 21% in their contributory pensions. However, due to the increase in non-contributory pension benefits, the average loss in the total pension income is just 8%.