Southern Cone Watch: Chile pension freedom ruling, Uruguay employee hiring incentive

The media spotlight in Chile returned to the private pension system after a court authorized a retired teacher to withdraw funds from her pension savings pot.

The private pension fund manager at the center of the case, AFP Cuprum, indicated it may challenge the decision in a higher court.

The complainant – who wanted to use the funds to pay off a mortgage – had argued that denying access to her savings amounted to a breach of her constitutional right to private property.

Pensions watchdog SP issued a statement saying that the purpose of retirement savings is to provide a pension. SP added that terminally ill people should be allowed to withdraw their funds and that an associated legal change would be required.   

The Chilean private pension system has come under fire for the meager pensions it provides to many retirees. A reform bill that contains measures to improve – but not dismantle – the country’s defined contribution system is in congress.

The private pension system holds around US$200bn in AUM.

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Uruguay’s government, for three months, will give companies 5,000 pesos (US$117) for each employee they hire or re-hire, labor minister Pablo Mieres said, local press reported.

In March, the unemployment rate in Uruguay was 10.1%, according to data from statistics agency Ine.

In May, 194,000 workers were claiming unemployment benefits, down from 198,000 in April but up from 48,000 in March, local paper El Observador reported. 

Between the middle of March and the end of May, the state paid out US$107mn in unemployment benefits, the paper said.

Uruguay has been commended for its handling of the coronavirus crisis, managing to control the spread without a national lockdown.