The Pension Reserve Fund (PRF) was established on December 28, 2006 with an initial contribution of US$ 604.5 million. It was set up in response to Chile’s new demographic scenario characterized by an increase in life expectancy and the growth of senior citizen population, adding on yet another challenge for the Government in terms of greater future retirement expenditures and the need to guarantee basic solidarity pensions to those who were not able to save enough for their retirement.

The PRF’s objective is to support financing of government obligations arising from the government’s guarantee to basic old-age and disability solidarity pensions and solidarity pension contributions arising from the pension reform. Accordingly, this fund serves as a supplementary source for the funding of future pension contingencies.

Pursuant to the Responsibility Law, PRF’s capital increases each year by an amount equivalent to 0.2% of the previous year’s gross domestic product (GDP). If the actual fiscal surplus exceeds 0.2% of GDP, the PRF receives a contribution equivalent to said surplus, up to a maximum of 0.5% of GDP.

This accumulation rule allows for new resources to be allocated to the fund in any given year regardless of the fiscal situation facing the country each year.