Guillermo Tagle

Guillermo Tagle

The uncertainty generated by the prolonged discussion of the eventual fourth withdrawal from the Pension Funds has kept the Chilean capital market in suspense and semi-detainee.

That the issue was not settled before the elections, although it was certainly not the objective of those who presented withdrawal bills, may bring rationality to the analysis of Congress, which will no longer have incentives to use this highly important issue for electoral purposes.

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Since the discussion of proposals for early retirement retirement began, almost all the analysts specializing in economic and financial issues (from various political currents) always agreed that this was bad public policy. One that, in addition to imposing an additional tax burden for the long term, would be detrimental to the community, due to the generation of deep economic, financial and capital market operating difficulties.

The ease and efficiency with which the first withdrawal materialized led many in the political world to describe its detractors as “exaggerated”, “defenders of corporate interests”, of having conflicts of interest, disqualifying any omen of harmful effects on citizens. This is how the discussion of the 2nd and after the 3rd withdrawal quickly flowed, in which already “engrossed” with the ease of this mechanism to distribute money quickly and effectively, it was decided to add the insurance companies, so that resources could also arrive to pensioners with life annuities.

All that which in the discussion of the first retreats was described as “ideological exaggeration”, when we got to the discussion of the fourth, it became reality. The value of fixed income assets vanished; pensioners with programmed withdrawal saw their savings fall and with it their pension; those who were in the process of buying a home saw the approvals of their eventual mortgage loans disappear; interest rates doubled, terms were shortened and inflation (largely the result of the abundance of funds distributed) ends up affecting the most vulnerable, whose wages lose purchasing power and begin to impoverish.

In a more macro context, investment projects cannot be financed, placements of bonds and stocks are stopped, placements of investment funds are suspended and the cost of credit rises. All this is no longer ideological speculation for the future. It is concrete reality.

The consequences of an irresponsible public policy alter the foundations of the functioning of the market and, as in all these things, the main victim is the ordinary citizen. The one who could not buy a home, the one who saw his pension reduced, the one who now does not have his salary (due to inflation), to whom the dividend in UF of his mortgage loan increased. The continuation of political discussions with a “populist” dimension or short-term electoral purposes has already cost the citizens of Chile dearly. What a bad public policy delivers on the one hand, it overcharges on the other.

It is to be hoped that having already finished this intense cycle of elections that we have had to face, the discussion can return to correct technical levels and with due concern to seek the common good for Chile.

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