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Pension Simulator

AFP · APV · Alternatives

Personal data

Current finances

$
$

AFP setup

A (+riesgo) → E (-riesgo)

Assumptions

% of time not contributing

Voluntary savings (APV)

$

Other savings

$

Retirement modality

Chile Pension Simulator

Project your AFP, APV and alternative retirement income — including retiring abroad

Chile's pension system is based on mandatory individual capitalization via AFP (10% of taxable salary up to 81.6 UF). This simulator projects your accumulated balance at retirement, your monthly pension across all three legal modalities (Programmed Withdrawal, Life Annuity, and Temporary Income with Deferred Life Annuity), compares the 5 multifunds (A-E), integrates your APV voluntary savings (Regime A or B), evaluates alternatives such as mutual funds, real estate, international ETFs and AFP Savings Account 2, and calculates the equivalent purchasing power if you retire in Spain, Argentina, Peru, Uruguay, the United States, Portugal, Mexico or Colombia — considering bilateral social security agreements.

What this simulator includes

  • ✓ Projects your AFP balance considering salary, growth, fund choice, and contribution gaps.
  • ✓ Calculates your pension in all three legal modalities: Programmed, Annuity, Hybrid.
  • ✓ Compares all 5 multifunds (A-E) with the same inputs.
  • ✓ Integrates APV (Regime A or B) and calculates annual tax benefit.
  • ✓ Evaluates alternatives: mutual funds, real estate, ETFs, Account 2, term deposits.
  • ✓ Shows equivalent purchasing power if retiring in Spain, Argentina, Peru, USA, Portugal, etc.

How does it work?

The Chile Pension Simulator accurately projects your retirement pension in Chile, considering the mandatory AFP individual capitalization system, all 5 multifunds (A-E), your voluntary APV savings, alternative investments, and the possibility of retiring abroad.

How does the Chilean pension system work?

Chile operates a mandatory individual capitalization system (Decree-Law 3,500 of 1980). Each employee contributes 10% of their taxable salary (capped at 81.6 UF, updated annually) to an individual AFP account. That money is invested in a multifund, and its real return determines the capital accumulated at retirement.

The 5 AFP multifunds

Fund A (up to 80% equity, ~5% historical real return) to Fund E (max 5% equity, ~2% real return). The fund choice is the single most impactful decision for your final pension.

3 pension modalities

Programmed Withdrawal (stays at AFP, inheritable), Life Annuity (transferred to insurer, fixed UF-indexed lifetime payment, not inheritable), and Hybrid.

APV voluntary savings

Regime A: 15% government bonus (cap 6 UTM/year). Regime B: tax base reduction (cap 50 UF/month). Regime A better for lower incomes; Regime B for higher brackets.

Retiring abroad as a Chilean

Chile has bilateral social security agreements with Spain, Argentina, Peru, Uruguay, Portugal, Mexico, Colombia, Canada, Australia, and most Ibero-American countries. No agreement with the United States, but the 2023 Chile-USA Tax Treaty prevents double taxation.

2025 Pension Reform

Law 21,735 phases in an additional 8.5% employer contribution over 9 years — 6% to individual accounts and 2.5% to a collective social security fund. When fully implemented, projected pensions could be up to 40% higher.

Formula used

Final AFP balance = Σ (Monthly_contribution_t × (1+r)^(N−t)) + Initial_balance × (1+r)^N, where r is the fund monthly real return and N is months until retirement. Monthly_contribution = min(Salary; 81.6 UF) × 10% × (1 − %Gaps). Monthly pension (Programmed Withdrawal) = Balance × i / (1 − (1+i)^−n), with i as monthly technical rate (~3% annual) and n as life expectancy in months. Life Annuity ≈ Programmed × 0.9. Replacement ratio = Pension / Final salary × 100.

Legal basis

Decree-Law 3,500 of 1980 (Chilean Pension System, as amended by Law 21,735 of 2025 – Pension Reform). Art. 62 (Programmed Withdrawal); Art. 61 (Immediate Life Annuity); Art. 64 (Temporary Income with Deferred Annuity). Law 20,255 (Universal Guaranteed Pension — PGU). Art. 20 L LIR (APV Regime A); Art. 42 bis LIR (Regime B, 600 UF annual cap). Ibero-American Multilateral Social Security Convention (2011). Bilateral agreements with Argentina, Uruguay, Spain, Portugal, Peru, Colombia, Mexico, Canada, Australia, Netherlands, Belgium, Denmark, Norway, Sweden. RV-2020 and B-2020 mortality tables from Superintendencia de Pensiones.

Assumptions & limitations

Fund real returns: A ~5.0%; B ~4.0%; C ~3.5%; D ~2.8%; E ~2.0% (historical averages 2002-2023). AFP taxable cap of 81.6 UF (updated annually in January). AFP commission = TotalRate − 10%. Mandatory contribution = 10% of taxable salary. Gaps proportionally reduce contributions. Technical annuity rate = 3% annual. Life expectancy: male 86 − retirement age; female 90 − retirement age. Life Annuity ≈ 90% of Programmed Withdrawal (insurer buffer). APV grows at chosen fund return. Other savings at user-specified rate. Cost-of-living per country based on Numbeo (Chile=100).

Reference estimation tool only. Does NOT replace professional advice or official AFP/SP simulators. Not precisely modeled: (1) 2025 pension reform transitional regime — employer's additional 8.5% (6% to individual account + 2.5% social security) phases in over 9 years; (2) Universal Guaranteed Pension (PGU, ~$250,000 CLP), phased out above income caps; (3) solidarity pension supplements; (4) pension tax (exempt below 13.5 UTA/year); (5) hybrid modality parameters; (6) early retirement (requires pension ≥ 70% of last-10-year average); (7) Bono por Hijo; (8) future changes to IUSC brackets or taxable cap. International agreements allow year totalization but actual payout conditions depend on destination country.

Frequently asked questions

How is the pension calculated in Chile?
Your AFP balance is divided by the Unit Required Capital (CNU), which depends on your life expectancy and a technical interest rate (~3%). Formula: Monthly pension = Balance × i / (1 − (1+i)^−n).
What are the A, B, C, D, E multifunds?
Chile's 5 mandatory funds ordered by risk/return: A (aggressive, ~5% real historical), B (~4%), C (~3.5%), D (~2.8%), E (most conservative, ~2%). Fund choice is the single most impactful decision for your final pension.
What are Programmed Withdrawal and Life Annuity?
Two main modalities. Programmed: funds stay in AFP, can decrease, inheritable. Life Annuity: transferred to insurer for a fixed lifetime UF-indexed payment, not inheritable but guaranteed.
How much APV should I contribute?
Regime B reduces IUT tax base up to 50 UF/month (600 UF/year); ideal for high brackets. Regime A: government contributes 15% bonus (cap 6 UTM/year); ideal for lower incomes.
Can Chileans retire abroad?
Yes. Chile has bilateral social security agreements with Spain, Argentina, Peru, Uruguay, Portugal, Mexico, Colombia, Canada, Australia and most Ibero-American countries. No agreement with USA, but the 2023 tax treaty prevents double taxation.
What alternatives are there to AFP?
AFP is mandatory for employees. Supplement with APV, AFP Account 2, equity mutual funds, real estate (rentals), international ETFs, and UF-denominated time deposits.
What is the pension replacement ratio?
Percentage of your final salary received as pension. OECD recommends at least 70%. Chile's current average: ~40% men, ~30% women.
How does the 2025 pension reform change things?
Law 21,735 (2025) gradually adds 8.5% employer contribution over 9 years: 6% to individual accounts + 2.5% to collective social security. Could raise pensions up to 40% when fully implemented.

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