/ Key Dates Of The Chilean Pension Reform

The Chilean pension system is undergoing significant changes with the publication of Law No. 21.735 on March 26, 2025. The reform includes gradual but significant increases in contributions, the creation of a state-managed fund (FAPP), limits on aggregate underlying fees, the replacement of the current pension funds by target date funds, and biannual tenders for the accounts of future retirees. The implementation deadlines began to be counted from the publication of the reform.

Felipe Cousiño, Partner

Francisca Donoso, Senior Associate

Laura Tressler, Associate

On March 26, 2025, Law No. 21,735, which introduces the most important reform in decades to the Chilean pension system (the “Law”), was published in the Official Gazette. It gradually, but significantly, increases mandatory contributions, part of which will be managed by a new state owned  fund (FAPP) to pay out certain defined benefits, introduces an additional layer of caps on underlying fees, replaces the current pension fund types for target date funds and introduces bi-annual tenders for 10% of accounts of future retirees (see our prior newsletter here) among many other amendments.

The deadlines for the effective dates and implementation of many provisions have begun to be counted from the date of publication of the Law.

•  The Superintendency of Pensions will gain powers by March 26, 2025.
• All necessary decrees must be published by March 26, 2026.
•  Most provisions will take effect on April 1, 2027, with exceptions such as those outlined below.

Additional employer contributions start on August 1, 2025 at 1.0% and will gradually increase once a year to 8.5% by August 1, 2035, with detailed allocations to various accounts, including the government owned FAPP and to the future retiree’s AFP account.

As of August 1, 2026 the allocation will be:

• 0.1% to the future retiree’s AFP account
• 0.9% to the FAPP as an interest bearing loan to be reimbursed on retirement
• 2.5% to the FAPP

By August 1, 2035 the allocation will be 4.5%, 1.5% and 2.5, respectively.

Only by 2045 will there cease to be a loan to the FAPP, so that the allocation of contributions will be 6% to the AFP account and 2.5% to the FAPP.

• Self-employed contributions will follow the same gradual schedule as for dependent workers.

• Defined benefits financed by the FAPP will be phased in starting January 1, 2026, with various types of insurance and compensation (including benefits for current retirees and for life expectancy differences between men and women) coming into effect through 2026.

• The PGU amount will increase gradually based on age starting from September 1, 2025.

• Key appointments and regulatory frameworks for the FAPP, including the enactment of its investment regime and awarding of tenders for management of the investment portfolio of the FAPP will be established by mid-2026.

• The implementation of the total underlying fee cap (including fees of foreign funds that pension funds invest in) to be set in the Investment Regime must be published by April 1, 2026 and will become effective on November 1, 2026.

September 1, 2026:

Deadline to publish the Investment Regime setting forth investment limits and benchmarks applicable to the minimum of ten AFP managed target date pension funds based on age cohorts of contributors (Target Date Funds) and which will replace the current A, B, C D, and E type pension funds.

April 1, 2027:

•  Go live date of the Target Date Funds to which the assets in the current A, B, C D, and E type pension funds must be transferred.
• Effective date of reference portfolios to serve as benchmarks for these Target Date Funds.

9. Tenders of Future Retiree AFP Accounts

By August 2027: The government is required to begin tendering 10% of AFP accounts for future retirees every two years.

December 2027: The first awards from the tenders for groups of future retirees will take place.

10. AFP Reserve Requirement Reduction

Until March 31, 2027: AFPs must maintain a reserve of 1% of each Pension Fund’s value as regulatory collateral for shortfalls in pension fund returns.

April 2027: The reserve requirement will shift to being based on the commission income earned by the AFPs.