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While the recently announced set of new rules for Chile's employer-sponsored pension plans (APVC) will provide the market a moderate boost, insurance association AACH believes the minimum percentage and number of employees required for a company to offer such plans is still too high.
The new rules lowered these requirements to 15% and 100 employees, from 30% and 300 originally.
"To fulfill this requisite, the company must have at least 667 workers. Very few Chilean companies have that many workers, so we expect this to gradually broaden to include smaller companies," AACH manager Jorge Claude told BNamericas.
On April 12, Chile's pension, banking and securities and insurance regulators issued a new set of rules for APVC accounts - which are similar to 401k pension plans in the US - that took into consideration opinions by potential players.
Claude approved of the rules making APVC plans more flexible according to how long employees have worked at a company and easier for employees to sign up for.
Under the new rules, employees will be able to claim funds chipped in by their employers as their own in their APVC accounts after five years, instead of two. This is known as vesting. The 24-month period was considered too short by local companies, as it was seen as a disincentive for talent retention.
According to experts, the APVC market could generate as much as US$600mn over the next few years.
Pension fund managers, banks, insurers, mutual funds and brokerage houses can offer APVC accounts.