Insurance companies initiate contact with lawyers for withdrawal of 10% in annuities

On alert are the insurance companies for the project that was approved in general this Tuesday in the Constitution Commission of the Chamber of Deputies, which seeks that people who have annuities can also withdraw 10% “of the funds.” That is why sources from the insurers indicate that they have already contacted lawyers to see how viable this initiative is.

There are several conclusions, among them, that a measure of this type affects the principle of intangibility of contracts and property rights. The same had been warned on October 6 by the president of the Commission for the Financial Market (CMF), Joaquín Cortez, to the deputies.

On the other hand, the president of the Chilean Insurers Association, Mario Gazitúa, says that they are concerned “to see how they try to change the rules of the game, questioning pillars as basic and necessary as legal certainty for the normal operation of business activity . What is being legislated regarding an eventual withdrawal of 10% in life annuities has no technical basis, since unlike what happens with the AFPs, in life annuities, there is neither an individual account nor a balance on which to calculate that 10% ”.

It explains that “those who retired under this modality transferred the funds that they kept in their individual capitalization account to an insurance company, in exchange for a fixed monthly payment in UF for their entire life.”

The insurer Renta Nacional points to the same: “Unlike what happens with the AFPs, there is no withdrawal here, because (the person) has already used all of their funds to buy a life pension. The pensioner, since signing the contract, is no longer the owner of the funds. In turn, the insurance company is obliged to fulfill the contract for the payment of life pensions, as stipulated. So, it is a fact that the project under discussion alters the intangibility of the contracts ”.

As with the first withdrawal of 10%, there is no unanimity on what could happen if the government decides to turn to the Constitutional Court (TC) to reverse the project by the quorum that Congress defined to vote on the reform constitutional, which was 3/5 as it is a transitory provision, and not 2/3.

Constitutional lawyer Arturo Fermandois believes it should be 2/3. “It is unconstitutional in form, since it is resorting to the location of the project as a transitory article of the Constitution, having to be located in the chapter of the rights and duties of the Constitution, in the permanent articles, and be voted as a modification to what is provided for in article 19 number 18 of the Constitution ”.

The UC constitutional law professor, Constanza Hube, believes the same: “The presentation of these retirement projects via transitory provisions is intended to evade the exclusive initiative of the President.”

A different opinion has the constitutional lawyer Tomás Jordán: “Based on the contents of the text, it seems not to be the case (it does not need a 2/3 quorum), since it does not create or modify the right to social security, but only regulates it, a matter that it is usually legal but at this time it is considered a constitutional reform. This qualification is an autonomous decision of the Congress ”.

However, when it comes to the withdrawal of 10% in annuities, there could be more unanimity. The president of the CMF himself said in Congress that “the ownership of resources makes a substantial difference with the recently approved constitutional reform. In this reform, property rights were not affected, since the money accumulated in the AFPs was owned by the affiliates (…) In the case of life annuities, it belongs to the insurance companies ”.

Fermandois points to the same and says that with this proposal “a real legal nonsense is being ordered (…) What this project does is to pretend that the affiliate still retains ownership of the funds, something that is not effective (.. .) Not even a constitutional reform can provide a thing so legally absurd with the respective damages of who would suffer these effects without the respective compensation, as all international bills of rights assure.

For its part, Hube for the same reason believes that “it is outright absurd (…) The insurance company does not manage pension funds, therefore there is no fund from which to exercise the withdrawal.”

Meanwhile, Jordán says that although he has not studied in depth the nature of the life annuity contracts, in case it is as the CMF points out, “more than an expropriation, it seems to me that it is a failed ownership. If people are not holders of that right to withdraw, and they cannot exercise it, basically it cannot be made effective, then it is not enough to expropriate it, because basically the reform would be giving ownership to someone who is not.