Retire in Chile

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Is it possible to settle in Chile once you are retired?

It is possible to come and spend your retirement in Chile. To do so, you need to apply for a temporary resident visa as a retired person or rentista. You will have to prove that you have a regular income allowing you to live in Chile. Most incomes types are eligible: pension, rent of a real estate property, dividends of company stocks.

In Chile, there is not a required minimum amount define by law. Each visa application is analyzed on a case by case basis. Yet, having more than USD 1000 per month and per family member improves the approval rate. Below this amount, it is more difficult to get a visa approved.

A significant lump sum of money (above USD 50,000), or buying a property in Chile can also help to get a visa approved. It is nevertheless useful to note that Chile has no "visa against investment" programs like some countries, which grant you a visa if you invest a certain sum of money in their economy or real estate market.

Why should you retire in Chile?

Many people choose to live in Chile for different reasons. First, if you come from a western country, your purchasing power will be higher in Chile, although the country is expensive for the region. Many expatriates choose to settle in Santiago, and especially in the neighborhoods of Vitacura, Las Condes or Lo Barnechea, where expatriate groups are very active. Especially since the central zone of Chile, around Santiago, has a Mediterranean climate, which is very pleasant to live.

Although Santiago is Chile's main economic center, it is not the only area where to spend one's retirement. Indeed, some retirees choose to settle:

• By the sea, in the region of Valparaíso, which has an oceanic climate. Many expatriates choose to spend their retirement in Viña del Mar or Valparaíso, two dynamic cities that are pleasant to live in and safe. There, you can swim in the ocean (although the Pacific Ocean is rather cool), walk on the beach, but also enjoy cultural activities, especially in Valparaíso, a colorful city known for its open-air museum and home to one of Pablo Neruda's houses.
• Or a little further north, in La Serena. It is the perfect place if you like Mediterranean landscapes and lifestyle. La Serena offers great beaches, ideal for long walks on the seaside. The climate is also very pleasant: in summer, temperatures rarely exceed 26°C (79°F), so the heat is not overwhelming. In short, La Serena is one of the privileged places to spend your retirement in Chile!
• Or in the south, the Araucania District, the Lake District or the River District. Concerning activities, you can switch between hiking in the mountains, in natural parks or by the lakes, and relaxing days at the many spas and thermal baths. For example, the Termas Geometricas near Pucón: they are open air baths wedged between two cliffs with lush vegetation. The South of Chile is great if you appreciate a mountain and rural lifestyle. However, you should know that both these districts are humid regions, so it rains very often!

How does the Chilean pension scheme work?

To pay for the pensions of retired people, Chile uses a defined-contribution funding system, which means that the country has chosen to transfer resources over time through savings and financial markets, rather than instantaneously between active and retired people.

In simple terms, each person contributes to their own pension during their working life, and draws a pension when they retire. Pension funds are called Administradores de Fundo de Pensiones (AFP).

However, AFPs do not enjoy a good reputation in Chile because of their dependence on the financial markets, the opacity of their management fees and the low pensions they pay to retirees.

If you plan to retire in Chile soon, or if you are already retired and want to move to Chile, the rest of this article does not concern you. However, you can read our article on the retirement visa if you want more information on the steps to take.

If you still have years to go and want to know how the pension scheme works and the equivalences between the Chilean pension system and that of your home country, have a look at the information below.

Retirement system for foreigners in Chile

As a foreigner, it can be relevant to contribute to the public system aimed at non-residents or to a private pension system such as life insurance.

There are arrangements for foreigners living in Chile. Since the law of August 25th, 1982, a derogatory regime has been implemented and allows foreigners not to contribute in Chile for their pension plan and health insurance. This exemption is possible under certain conditions. Foreigners wishing to have a pension plan and a health cover outside Chile must meet the following criteria:

• You are a foreign technician, that is to say you have a diploma.
• You are covered by a social regime abroad in case of illness, disability, old age and death.
• You have a Chilean employment contract that stipulates, in a specific clause or in an appendix, the application of this exemption law.

If you are currently employed in Chile, there are two types of contracts:

1. Expatriate contract: as a general rule, expatriates maintain a contract with their company in their home country and sometimes add a Chilean contract with a distribution of income between both that varies depending on the company. As a result, a contribution to a Chilean pension plan can be implemented or not. These contributions can be avoided, which increases the employee's compensation and reduces his/her tax burden. Indeed, If the employee already contributes in his/her country of origin, the employee can benefit from the exemption provided by law.
2. Local contract: this type of contract implies that the employee does not have a contract from his/her country of origin and his/her entire salary is paid in pesos in Chile. The local company will of course contributes to a chilean pension fund by default. Yet, the employee can ask to apply the exemption from contribution. In this case, the employee sends the funds that would normally have been deducted for his/her pension fund in Chile to a public or private pension scheme abroad. The funds will therefore be paid to the employee and tax-exempt. This withdrawal is usually done when leaving Chile. It does not matter if you successively had several jobs, since all contributions are centralized at the AFP.

Whatever your situation, you should check whether the withdrawal of the funds is interesting for you. If your country of origin has an equivalence convention for pensions with Chile, it may be more interesting to have the years contributed in Chile taken into consideration in your country of origin for the calculation of your pension, to get a full pension.

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