Chile’s Minister of Finance, Ignacio Briones, gave instructions for changes to laws 18.045 and 18.046, which were originally meant to give more transparency and responsibility to AFP administrators, in other words; keep them honest.

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The changes are great news for the administrators, but negative news for Chileans and for Felices Y Forrados, a non-regulated stock market tracker, and advisor (for less than $3 a month) to non-professionals that need help making the most of their accumulated pension funds.

Over-saturated the AFPs

The last time that Felices y Forrados made a recommendation, on May 11, to change from the riskiest fund (A) to the most conservative fund (E), the AFP websites were over-saturated by people going to their websites to change from one fund to another. This might have been the straw that broke the camel’s back for the system, and for the Superintencia de Pensiones. The changes to these laws seem to be the result of this last fund-move recommendation.

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Every time people change funds en mass, it creates problems for the Santiago Stock Exchange and the administrators of the pension funds, since they have to execute buy and sell orders in the thousands of accounts under their management. This is an administrator’s nightmare, as well as having no benefit to them, since they cannot charge for movements between funds.

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