A bill that would let private pension fund members provide 'self-loans' was submitted to Chile's lower house of congress.
The legislation submitted by center-left lawmakers Miguel Alvarado and Guillermo Ceroni (PPD) and socialist Raúl Saldívar (PS) would allow members to loan themselves up to 20% of their pension funds managed by AFPs at below-market interest rates.
"There are thousands of people without access to banks, not even to products from [state-owned] Banco Estado, and who have to turn to informal lenders who charge extremely high rates and then threaten them for payment," Alvarado said in a lower house press release.
"If pension funds are used to finance large companies, why shouldn't small food entrepreneurs have access to capital from their own funds?"
Saldívar added that the bill does not seek to address the problems with Chile's pension system, which needs a "much more structural and integral solution," but rather use the funds to boost the economy by helping entrepreneurs.
In the rally, the head of the organization, Luis Messina, called on demonstrators to switch their funds from AFPs Provida and Cuprum (controlled by MetLife and Principal Financial Group, respectively) to any other pension fund manager. The measure seeks to protest against the recent mergers carried out by these AFPs with AFPs Acquisition and Argentum, respectively, under an old tax law allowing them US$400mn in tax savings, according to Messina.
A national strike was called for November 4.