Joaquin Cortez, Chairman of the Commission for the Financial Market (CMF), addressed some of the concerns in the event that the Senate is approved on 10% withdrawal of pension fundsAmong them, the impact on insurance companies in the role they play in disability pensions.
Making an assumption, he started explaining, it should be thought that the AFPs “will initially sell liquid assets such as investments abroad, time deposits or sovereign instruments.”
And he added: “If you make a calculation you realize that the amounts are significant. So we made the statement that this requires more time for pension funds to sell these papers, without big losses ”.
The CMF sent Monday to the Senate Constitution Committee a minute where it stated that the AFPs could eventually divest around US$19.500 millones within a maximum period of 30 days, which it would not be recommended due to its impact on the capital market.
For this reason, he proposed that members access pension funds in 90 days.
Cortez participated in the first session of a new cycle of the Monetary Club of the Finis Terrae University. There, he maintained that although in the past there could have been criticism of the investment of pension funds outside Chile, today “It is a blessing that approximately half of the resources are invested abroad.”
The president of the CMF also commented that there are important operational issues to take into account, such as sufficient information to pay a maximum of 11 million people; and a impact on insurance companies.
“They are the ones that have provided the disability and survival insurance. What they do is cover the missing balance between the pension that is accessed and the funds that people have. If people reduce their funds, companies must make a bigger contribution. There is also old contracts that are not fully settled. This is another of the issues that we made the parliamentarians see, “Cortez pointed out.
During his talk on the activity of Finis Terrae, the authority also analyzed the work that the CMF is doing, starting with its pillars -solvency and financial stability, market conduct and market development-, the recommendations made by the IMF and the measures -especially flexibility- that it has had to promote for banks and other sector players, as a consequence of the economic impact of the pandemic.
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