Chile's AFP pot piles on the pounds
Assets managed by Chile's private pension fund administrators were the equivalent of 83% of GDP last month, a figure that could rise in the medium-term, an industry official forecasts.
The country's pension fund managers, or AFPs as they are known, held about US$219bn in January. In 2013 they held US$167bn. The total had dipped to about US$150mn by the middle of 2016, when it started to rise rapidly.
Of the US$219bn, 30% corresponded to contributions made by members and the balance returns on investments, local paper El Mercurio reported the general manager of Chile's AFP association, Fernando Larraín, as saying.
Larraín said funds performed well in 2017, with returns totaling US$18.75bn.
In terms of growth prospects, Larraín said AUM could draw level with GDP but not within the next few years.
A policy already in force, which requires non-contracted workers to make contributions, will help boost AUM. And president-elect Sebastián Piñera plans to get employers to contribute 4% of employee salaries. He has made pension reform a priority.
"It's important that the pot grows in order to have better pensions," Larraín was quoted as saying.
The system has come under fire in recent years for the small pensions that some retirees receive.
ALSO READ: Gripping the thorny stem of pension reform
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