For four decades, Chile has been a laboratory for pension reform. His review of the 1980s, based on individual capitalization, transformed retirement savings in Latin America. Compulsory contributions, administered in private by pension administrators (AFP), built one of the deepest capital markets in the region and turned Santiago, the capital city of Chile, a regional financial center. Sovereign bonds were sought, abundant opi and foreign investors saw Chile as a modernity model.
That prestige has faded since then. The low self -funded replacement rates, a median of 17% between 2015 and 2022, left dissatisfied workers. The distrust of the AFPs, often accused of charging high rates for medium yields, has grown. Then came the pandemic, when the Chilean Congress authorized three extraordinary retreats. More than $ 50 billion drained between 2020 and 2021, which represents more than 20% of accumulated individual pension funds for 2019 and sixteen percent of the GDP of 2022 of Chile. For homes, this was a lifeguard; For capital markets, a break. The liquidity fell, the emission slowed down and a long -term savings group once considered Sacrosanct was reduced.
In March 2025, Congress approved a long -awaited pension reform, replacing the “multifundal” model with generational funds. Multifunds allow workers to choose between variable risk portfolios, but many affiliates were poorly equipped, often chasing short -term yields or stuck in non -coincident breaches. New generational funds apply “life cycle investment”. Young savers are placed on capital wallets, gradually changing towards the bonds as they age. Economists argue that this reduces errors and produces more stable results. Regulators see it as common sense: align portfolios with demography instead of the time of the market.
The reform also adds contributions from the employer, increases the guaranteed universal pension, a state -funded benefit to guarantee a minimum pension to older adults, regardless of whether they constantly contributed to the private AFP system. The reform also forces the competition by auctioning affiliates to the lowest rates suppliers every two years instead of four. These measures must raise replacement rates, press AFPs to reduce costs and improve efficiency, and extend the risk more just.
However, the reform is still cautious. Generational funds make portfolios more rational but save more passive. Transparency is limited, changing cumbersome suppliers and superficial commitment. That conservatism runs the risk of leaving Chile’s pensions in a modern but analogous in spirit. Throughout the world, finance are changing quickly. Digital wallets, open banking and token are remodeling how capital is collected and invests. The Chilean model, even with generational funds, may be solving yesterday’s problems with yesterday’s tools.
The most promising innovation lies in tokenization: representing bonds or actions in digital accounting books. This promises a faster agreement, lower costs and greater transparency without altering the underlying asset. Europe has launched its DLT pilot regime, and Switzerland’s digital exchange already broadcasts tokenized bonds. Chile is not sitting in their hands. In 2023, his law for financial technology innovation created a regulated framework for open and cryptographic companies. Officially launched in 2020, the Santiago Stock Exchange (BCS), the Central Securities Depository (DCV) and Telco GTD launched Blockchain, the first corporate blockchain consortium in Latin America, to test the ties and tokenized actions. If it is handled prudence, this change could transform Chile into a Regional Center for Institutional Cryptographic Investment and make initiatives such as Scalex Santiago Venture, Corfo and Start-Up Chile more dynamic channeling digital savings in new companies. Tokenization would not only reduce costs and accelerate the liquidation, but also increase transparency, improve liquidity through fractional property and expand access to the market. These characteristics could give pensions a safer exposure to innovation while pushing Chile’s financial infrastructure towards greater global efficiency and integration.
More controversial is cryptography. Could Chile’s pension savings eventually include Bitcoin? Maybe, but not. For that to happen, the law must be modified to explicitly recognize digital assets as eligible instruments for retirement savings investment. The Central Bank of the country must also approve them, and regulators must enforce custody, assessment and risk standards. Even then, the exhibition would require caution. Direct currency holdings would collide with prudential rules. At least, the exhibition must be through ETF regulated or notes quoted in the stock market (ETN), with explicit legal recognition and strict limits. Experiments from other countries with cryptographic investments show bets. Germany allows certain pension vehicles to invest up to 20 percent in cryptography. Kiwisaver in New Zealand has ventured into crypt through ETF. Some US public funds have bought Bitcoin products. But the teachers of Ontario de Canada and the CDPQ of Quebec lost a lot in failed companies such as FTX and Celsius. The lesson: prudence must prevail.
Chile could achieve a balance with a dual path. Bonds and tokenized actions should be treated as equivalent to conventional ones if they are issued in regulated places. In my opinion, the cryptographic exposure, if allowed, must come only through ETF or ETN, initially limited to 1% percent to understand the market, but it should be allowed to reach at least 25% percent of the capital allocation. License custody, asset segregation and insurance would be mandatory. The complete dissemination of volatility and downward risks should be required so that savers know what is at stake. Such a road map would open pensions to innovation without endangering stability. And by integrating tokenization into the main savings, it could accelerate the digitalization of the financial services ecosystem of Chile, establishing standard banks, runners and insurers should follow.
But technical solutions alone cannot rebuild trust. Chile’s pension debate is about legitimacy as much as design. To address that, the reforms could go further. Performance -based refunds could link AFP rates to results, rewarding higher long -term performance. “Open pensions” platforms could reflect open bank, offering affiliates real -time comparisons of rates and returns. Sandboxes could prove actions of tokenized funds and intelligent contracts. Allowing a savings splinter to serve as a mortgage guarantee could relieve tensions among younger workers, who feel blocked from housing markets, and retirees who demand higher pensions, softening intergenerational strains without undermining long -term funds, while keeping retirement objectives intact. Affiliates should also share more directly in upward profits. An idea would link extraordinary profits with workers’ accounts: when returns exceed a reference point, the surplus would be accredited in supervision supervision. This would make savings partners in success and maintain the AFPs responsible for performance, not just the scale.
Chile deserves credit to move where its neighbors would mostly be given. Argentina has lying between state and private control. The Brazilian system is vast but fragmented. Mexico’s reforms are still disputed. Chile continues to adapt, although cautiously. But bets are high. Move too slow and capital markets run the risk of stagnation, long -term savings hungry. Move too fast and pensions could catch into cryptographic storms. The balance between prudence and innovation is delicate.
Generational funds will make Chile’s pensions look elegant on paper, aligning portfolios with demographic data and reducing expensive errors. But without a deeper innovation in technology, transparency and citizen commitment, the system can remain an analogous of heart. The pension design today is not just about adjusting contributions or adjusting commissions. It is about taking advantage of technology, safeguarding trust and giving citizens an active role in the configuration of their financial future. If Chile manages that balance law, it could once again establish the regional standard. Done well, pensions could catalyze the modernization of all financial infrastructure. Otherwise, Chile can find a modern but crispy system underneath, intended for another reform and another trusted crisis.
