Pension funds in Chile saw a $25 billion decline during the first month of the conflict in the Middle East, representing a 9.5% drop in their value when measured in U.S. dollars.
At the end of February, assets managed by the AFP pension administrators totaled $260.569 billion, a figure that fell to $235.801 billion by the end of March. This downturn followed the start of U.S. and Israeli strikes against Iran on February 28.
The AFP Association explained that the reduction in funds—which slipped from representing 66% of GDP to 64.6%—is primarily due to exchange rate factors. "The decrease in dollar-denominated funds is largely explained by the rise in the exchange rate during the period," the trade group noted.
According to the Association's breakdown, approximately 80% of the decline in dollar terms is attributed to the peso's depreciation against the dollar, while the remaining 20% is linked to lower fund profitability.
Impact on profitability and exchange rates
The exchange rate rose from 861.19 pesos at the end of February to 931.57 pesos by the end of March. However, the drop appears less drastic when analyzed in local currency. Economist Soledad Hormazábal pointed out that when measured in UF (a Chilean inflation-indexed unit), the decline was only 2.2%.
"If we look at the value of the pension funds in UF, the movement is smaller: in February it was 5.63961 billion UF, and in March it fell to 5.51346 billion UF," Hormazábal specified.
Meanwhile, academic Cecilia Cifuentes of the Universidad de Los Andes stated that one-third of the monthly drop is explained by negative returns, with the remainder caused by the rising exchange rate. The Superintendency of Pensions confirmed that all fund types ended March in the red.
Funds A and C suffered the largest real losses, with declines of 3.02% and 2.52%, respectively. Funds B, D, and E also recorded drops of 2.45%, 2.07%, and 0.86%.
Uncertainty surrounding the war and its impact on the oil industry has fueled inflationary expectations. This climate of global volatility keeps pension funds well below the levels they maintained prior to the three government-authorized withdrawals in previous years.