The Pension Fund Administrators Association, the industry body representing pension fund managers, denied that the 10.4% decline in Fund E's return between January and September 2026 was the result of a "bet." It did so in a four-point statement, according to BioBioChile.
First, some context. Chile's system has five funds, from A to E. A is the riskiest, with more stocks. E is the most conservative and invests mainly in fixed income, meaning bonds that pay an agreed interest rate. It is chosen by those who prefer sleeping soundly to earning a lot.
According to the association, "the decline was concentrated mainly in September." The explanation is the interest rate increase by the Federal Reserve, the United States' central bank. When rates rise, older bonds lose value. It works like a seesaw: when one rises, the other falls. That is why fixed income can also lose money.
The controversy centers on interest rate swaps, a type of derivative. A derivative is a contract whose value depends on another variable, in this case foreign interest rates. According to BioBioChile, pension fund administrators built up positions that would gain if rates fell. That did not happen, amid rising energy and fuel costs worldwide.
The association responds that "this is not a bet by pension fund administrators. This is a long-term strategy." It adds that Fund E is conservative, "but that does not mean it can only buy bonds or static instruments." It maintains that derivatives are used in all fixed-income funds worldwide to adjust the timing of cash flows.
For perspective, the association recalled that Fund E returned 8.06% in 2025. It also cited 2021, when the fund fell 13.11% in real terms, a loss it had recovered by the end of 2025. Even so, the statement itself warns that this does not guarantee a future recovery.
And who does this hurt? The association says Fund E does not have a concentration of people approaching retirement. Choosing it is voluntary, because the default allocation distributes people among funds B, C and D according to their age. Most people nearing retirement are in D.
According to the association, most Fund E members are between 30 and 45 years old, and only 10% are 60 or older. If you are in that younger group, you have more years for your balance to recover, although no one can guarantee it.
For those nearing retirement who can choose a lifetime annuity, the association argues that higher rates can offset part of the decline. A lifetime annuity is a fixed pension paid by an insurance company for life, and its amount increases when rates rise.
The fourth point concerns pension fund withdrawals during the pandemic. According to the statement, after those withdrawals "the availability of long-term local fixed-income instruments declined," forcing the structuring of products with local and foreign investments.
The association closed with an overall figure: despite Fund E's losses, the combined figures for the funds show that Chileans' savings grew by US$10,778 million so far in 2026.