This July, the Chilean opposition celebrated a major political victory, as the Senate passed a bill allowing Chileans to draw on some of the money locked away in their privatized pension funds, or AFP (Pension Fund Administrators). This was a blow not only against Sebastián Piñera’s right-wing government, but also one of the pillars of the neoliberal economic model inherited from Augusto Pinochet’s dictatorship.

AFPs are widely hated by the Chilean population — and their abolition was a major demand of the revolts that shook the country in October 2019. Under this individual capitalization system, workers are mandated by law to contribute 10 percent of their monthly income, along with interest rates. AFPs then use these funds as capital to invest in financial markets in Chile and abroad.

This system introduces great uncertainty for those thus forced to save. Contributors can choose one of at least five plans, but none are free from financial risk. It is suggested that older contributors should invest in low-risk plans, which have an average of 5 percent variable income. Younger contributors, on the other hand, are encouraged to subscribe to riskier plans, which can reach 80 percent of variable income.