Chilean lawmakers approve second pensions withdrawal

By Aislinn Laing

SANTIAGO, Dec 3 (Reuters) - Chilean lawmakers on Thursday approved a second withdrawal from pension funds for citizens struggling to make ends meet during the coronavirus pandemic.

The bill, which now goes to a final Senate vote due to take place on Thursday evening, would allow for another 10% withdrawal from Chile's privately managed pension funds.

It was approved by 131 lawmakers in the opposition-dominated lower house of Congress, with 12 voting against and two abstaining.

The bill was introduced by conservative President Sebastian Pinera's government two weeks ago to head off a more comprehensive proposal by opposition lawmakers and won early approval in the Senate last week.

But it has been significantly amended in congressional committees to remove a cap on who was eligible to benefit and the obligation that the money be repaid, effectively removing the differences between the bills.

The government has argued against any withdrawals, saying they would reduce already low pension payouts and that citizens should rely on the government's emergency coronavirus measures instead, which include spot payments and rent subsidies.

A first move on pensions was approved, however, with cross-party support in July, with its impact on markets more limited than originally feared and giving the economy a bounce as people spent some of the $17.4 billion withdrawn.

The government also opposed a second withdrawal floated by the opposition. But after it became apparent that members of the ruling Chile Vamos coalition would help the initiative over the line again, the government was forced to do a U-turn and introduced its own bill.

Those backing the pension withdrawals argue the state provisions do not go far enough. Chile's unemployment figures remain near a decade-long high. A poll by Ipsos released on Thursday found that 53% of respondents reported a drop in their incomes, while a third said their debt levels had increased.

Economic activity fell by 1.2% in October, disappointing the market, which had expected some revival by then.

The government warned this week of a possible second spike of the virus to come in January, ahead of the arrival of a vaccine. (Reporting by Aislinn Laing; Editing by Peter Cooney)