The bill had earlier been passed in the Chamber of Deputies on Tuesday, and after its passage in the Senate on Wednesday, it was now ready to be enacted as a law, reports Efe news.
The initiative was a part of the social agenda of the government led by President Sebastian Pinera, in the wake of massive citizens' protests that have been going on in the country for almost seven weeks.
One of the major complaints of the protesters targeted the privatised model of the Chilean pension system.
The agreement was the result of an understanding reached in the framework of budget discussions between government and opposition legislators.
The increase in pensions for the most vulnerable sections will begin to be gradually implemented from this month and nearly 1.6 million people will benefit from it.
The pension bill sought to increase the amount under the Basic Solidarity Pension (PBS), which is granted to people who have not been able to access a pension; and increase the Maximum Pension with Solidarity Contribution (PMAS), for which the state is not required to make an extra contribution.
The Solidarity Social Security Contribution (APS), which complements the income of retired people that are a part of the privatized pension system but receive very low amounts, will also rise as a result of the increase in PBS and PMAS.
Therefore, in December this year, the PBS will rise by 50 per cent for pensioners aged 80 and above, from 110,201 pesos ($140) to 165,302 pesos (about $210).
In the case of PMAS, from December there will be a 50 per cent increase for pensioners aged 80 and over, and will reach 488,000 pesos.
Both the PBS and PMAS will increase 30 per cent for pensioners aged 75 to 79 and 25 per cent for pensioners under 75. Moreover, the they will increase progressively in 2021 and 2022 up to 50 per cent.
The bill also allows those who receive disability or solidarity pensions not to lose that benefit if they also receive working income.
( With inputs from IANS )