In July, a government-appointed commission investigating pensions reform recommended allowing domestic banks to enter the sector, to increase competition and reduce the commission that pensions providers charge the public for running a private pension.
Currently, it is compulsory for those in salaried employment to contribute 10% of their earnings to one of six private pension funds. Providers charge a commission of 25% on the contributions.
In total, Chile has the equivalent of $80 billion of private pensions under management (compared with just $30 billion in its much more populous neighbour, Argentina).
Andras Uthoff, head of social development at think-tank the Economic Commission for Latin America (Eclac) and a member of the advisory commission on pensions, says: “The main reason for allowing domestic banks to come into the market is to reduce the commission levels, which we feel are too high.
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