COVID-19 and Attitudes Towards Early Withdrawal of Pension Funds: The Role of Trust and Political Ideology

Abstract

In response to the COVID-19 pandemic, the Chilean Congress approved three laws between July 2020 and April 2021 that allowed early withdrawals of pension funds without any eligibility constraints or penalties. In this paper, we use nationwide survey data to examine the factors associated with people’s assessments about the suitability of these policies in the context of the pandemic, with a particular focus on trust and political ideology. We find that respondents that declare high levels of trust in Chile’s pension system, financial system, and political institutions and actors tend to oppose early withdrawal policies. Similarly, respondents on the right of the political spectrum and those that voted for the incumbent president, who opposed this policy, also declare opposition to early withdrawals. Overall, our findings suggest that political attitudes and beliefs are associated with policy views on changes to Chile’s pension-fund system and that support for early withdrawal policies may be driven by lack of confidence in institutions.

Keywords: retirement, pension, early withdrawal of pension funds, trust, political ideology