AFP: Second round of 10% funds access in Chile

After several rounds of negotiations in the Chilean Parliament, a second AFP withdrawal has been approved. This was published as law by Thursday 10^thof December 2020 (link to publication in Diario Oficial).

There are some changes to the first round (review previous article) which include the following adjustments:

1. You can access 10% of total funds in your AFP tax-free and at zero cost if your average monthly income level is under $1.5 million pesos (30 UTA-unidades tributarias anuales).

If your (average) monthly income is above $ 1.5 million pesos and you request the additional 10% payout then this withdrawal will be taxed as income. If you make the request during December 2020, you will be charged income tax in your 2021 tax declaration (April 2021). If you do not request the withdrawal until 2021, you will be charged at the tax declaration in 2022. The AFP does not deduct the taxes automatically. It will apply to SII during the tax declaration of the corresponding year.

You can see what level of tax this would mean for you by looking at the Chilean tax tables.

What remains unmodified is the minimum/maximum amount of funds retrieval of 35/150 UF respectively. The payment conditions did improve to a maximum of 20 working days (in case you get two deposits).

* Calculated amounts according to UF value by December 7^th2020 ($29.077,46)

2. Anyone who still has funds in the Chilean AFP system is entitled to make use of the second 10% withdrawal. This includes foreigners with pending visa status, people already in retirement and people who have already left the country. Excluded are governmental functions, congressmen or their direct assessors.

Accessing the second 10% withdrawal does not impact a subsequent full fund retrieval under the Chilean law 18.156 for professional technical foreigners (assuming you fulfill the requirements). You just have to do a step-by-step approach and cannot submit the different requests at the same time. This second retrieval can be done within the following 365 days after publication as law.

3. Total payout will take place within a maximum of 20 working days after your request. If the payout amount is less than 35 UF, you will receive your money in one transfer. The AFP company has to respond officially within 4 working days after submission with an acceptance or rejection.

If you are a foreigner and have already left Chile (with no current bank account in Chile), you can make a submission through your local Chilean consulate. The AFP will deposit your funds in your local bank account (using Transerwise; no extra bank deposit charges will apply to you). You can find the correct form here.

4. If you have not yet requested your first 10% withdrawal, you can make both submissions at the same time but will need to complete two different forms at your AFP. If you only want to request one type, you need to select which 10% retrieval you want to access (first or second withdrawal).

5. The process is free of charge and does not require any intermediary. The only difference to the first 10% request is that you need to insert twice your Chilean ID (RUT/Carnet) and its serial number, your email, phone number and bank account details. Please use online forms (web or call center) and take into account that the web traffic at the AFP websites will likely increase during the first weeks after the law is published. After the first two weeks you will also be able to make the request in person at the AFP offices.