Finance Minister Mario Marcel refuted concerns about the proposed biennial bidding of affiliates and the alleged expropriation of investments.

From the Chamber of Deputies of Chile, the Minister of Finance, Mario Marcel, responded to the letter sent by the insured association of the United States, in which they expressed "concern" about the proposal for pension reform that is being processed this Wednesday.

Among other things, according to the American union, the proposal “requires a biennial tender for pension affiliates,” which would constitute “an expropriation of significant U.S. investments in Chile, and a violation of Chile’s obligation to provide fair and equitable treatment to U.S. investors.”

Speaking from Congress, the Secretary of State began by saying that “the letter comes from an organization that represents three shareholders of three Chilean AFPs. Of those three, two of them charge the highest commissions on the market.”

“In the past we have had other communications from this association, we have had many messages, many statements from these administrators. There have been verbal and written communications with a similar tone, although they were originally directed at a broader spectrum of reform issues,” he added.

He added that, on this occasion, “this letter focuses on the bidding mechanism for the membership of active accounts, the 10% of members each year who are part of this project.”

In this regard, Marcel explained that “the purpose of these tenders is to increase competition in the pension fund management market, reducing the fees paid by users, without sacrificing the profitability of investments.”

"This regulation, or this component of the reform, was recommended by renowned local experts, it was analyzed and recommended by the commission of experts convened by the Senate Labor Committee, with experts from across the political spectrum represented in that commission," he explained.

Pension reform: “What is stated in this letter is incorrect”

Along the same lines, the head of the Treasury said that the proposal contained in the project, "not what was discussed before or what was concocted at some point, but what is in this project, contemplates a series of safeguards so that the transfer of people, when there is an administrator that wins the tender, and members who move from other administrators, there are safeguards so that the transfer of people does not harm the performance of the corresponding funds."

“What is stated in this letter is incorrect. The bidding mechanism will not involve a massive transfer of assets to the markets that will affect their price. In addition to this, this letter does not mention that there is a set of provisions within this project that seek to give greater stability to the funds,” he said.

He concluded that "the reform is expected to have very positive effects on the volume of savings and the depth of the capital market, therefore, far from being harmed, what we are going to see is a recovery of the depth of the capital market and with this the profitability of investments."