Chilean President Sebastian Pinera on Tuesday abandoned his challenge to an opposition-led bill allowing citizens to draw down a third tranche of their pensions, saying he would sign it into law.

Earlier in the day, the country’s Constitutional Court rejected a bid by Pinera to block the fresh drawdown on pensions, saying it would not overrule Congress, which gave final approval to the project on Friday.

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Pinera had also sought to head off the bill by announcing his own version on Sunday night that provided for repayments and taxation on some withdrawals, but members of Congress made clear they would oppose it.

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On Tuesday afternoon, after meeting with his top advisers, the president said he would withdraw his bill but introduce another to give payouts of 200,000 Chilean pesos ($284) to citizens who had already emptied their pension funds. The bill would also create a mechanism for withdrawals to be repaid and impose taxes on the wealthiest 10% of those withdrawing anew from pension funds.

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The outcome is a harsh blow for Pinera, a centre-right billionaire in the final stretch of his second nonconsecutive term running Chile.

He has overseen one of the world’s most rapid COVID-19 vaccination campaigns but his popularity remains in the doldrums since the outbreak in October 2019 of intense and often violent social protests over inequality that sparked a ferocious response from the security forces.

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