Wharton Pension Research Council Working Papers

Document Type

Working Paper

Date of this Version



Chile, with one of the largest and best funded defined contribution programs in Latin America, held over USD $200 bn in assets at the onset of the Covid-19 crisis, or more than 80% of GDP. Reacting to populist pressures during the pandemic, however, the government gave non-retired participants three separate opportunities to tap into their retirement accounts, leaving some 4.2 million participants with zero retirement savings and draining around $50 bn from the system. This paper explores several hypotheses regarding why people withdrew their pension money early, and it also presents evidence regarding the likely impact of this short-term policy on long-term retirement wellbeing. We conclude with lessons for global policymakers seeking to protect pension assets critical for retirement security.


Financial well-being, pension withdrawals, retirement security, financial literacy

JEL Code

H31, H75, H55, I38

Working Paper Number


Copyright/Permission Statement

All findings and conclusions expressed are those of the authors and not the official views of any institutions with which the authors are affiliated. © 2023 Fuentes, Mitchell, and Villatoro.


The authors acknowledge research support for this work from the Pension Research Council/Boettner Center at The Wharton School of the University of Pennsylvania, and they appreciate fine programming assistance from Yong Yu. Without implicating them, the authors express thanks for comments from Felipe Balmaceda, Peter Brady, Juan Luis Correa, Alejandra Cox, Romain Despalins, Julio Guzmán, Olano Makhubela, David Tuesta, and participants at the 2021 IPRA conference and Universidad Andrés Bello Economics seminars.

Included in

Economics Commons



Date Posted: 02 February 2023