/ Private Equity Investments for Chilean Pension Funds – Aggregate Limits Raised by Central Bank

16 April, 2020

The Central Bank of Chile has published on Wednesday April 15, 2020 its resolution raising the aggregate investment limits for most of the different types of Chilean pension funds managed by AFPs. The resolution will allow increased investment in private equity, private debt, infrastructure and real estate. This is the first time the Central Bank raises the aggregate limits since Chilean pension funds were first permitted to invest directly in private equity funds back in 2017.

Thus, for type A pension funds the limit is raised from 10% to 13% of their assets, in the case of type B pension funds the limit is raised from 8% to 11%, for type C pension funds the limit is raised from 6% to 9% and for pension funds type D the limit is raised from 5% to 6%. There is no change in the case of type E pension funds which stay at 5%. In the case of the unemployment fund (FCS) the current 5% limit is already at its statutory maximum.

According to a press release from the Central Bank, this resolution is aimed at promoting an increased portfolio diversification for pension funds, allowing them to have access to better risk/return ratios.

However, the Central Bank resolution still falls short of raising the limit to the 15% statutory maximum for investments in these alternative assets. The explanation given by the Central Bank was that this resolution is consistent with its policy of raising limits gradually in order to avoid market disruptions resulting from large scale portfolio adjustments by pension funds.


Felipe Cousiño

Partner – Alessandri