This article examines the ideology and principles that inspired the privatization of social security in Chile during the Pinochet regime. The article highlights the role of the state in the establishment of a fully funded, defined contribution system, as well as the importance of the transmission of ideas from the halls of the University of Chicago to Chile's centers of power. In the case of Chile, the ideas of freedom espoused by Milton Friedman and Frederick von Hayek were applied by a repressive authoritarian regime that violated human and political rights. Furthermore, these ideas served to legitimize a political and economic system based on the deprivation of freedom. Although social security reform was a critical component of a revolution going on in Chile in the 1970s, the ultimate purpose of this article is to show that the effects of this reform are by no means limited to Chile. The Chilean reform has been adopted by countries in Latin America and other parts of the world, and it has critically affected those societies as well. The article shows that the establishment of the fully funded, defined contribution system has been very costly, both for the state and the insured, while coverage has dramatically declined. The article concludes that the market economic reforms have enhanced only the freedom of those who could take advantage of the new economy, and that few of the promises made during the Pinochet regime by the neoliberal economists came true.

This article analyses and compares President Bachelet's successful efforts to reform the Chilean pension system in 2008 and her failure to achieve the same objective in 2017. The article addresses the impact of electoral promises, policy legacies, policy ideology, presidential power, the role of the private sector, and the role that the government coalitions had in the process of pension reform during the Bachelet administrations. We argue that the 2008 reform was possible because of Bachelet's personal commitment to reform and the presence of a stable governing coalition that had the will and capacity to legislate. In the second administration, although the policy legacies and ideology had remained the same, the reform did not materialise due to intense conflict within the administration and within the government coalition, as well as conflict between the administration and the coalition. These conflicts, in turn, generated a vicious cycle responsible for Bachelet's declining popularity, limited political capital, and reduced support for reform. A stagnant economy further undermined these efforts. In brief, this article argues that when assessing success and failure in pension policy reform it is important to analyse not only policy legacies and political ideology but also the strength of the executive, the cohesion of the governing coalition, and the country's economic performance.

The purpose of this article is to analyse the economic and social implications of the privatisation of social security in Chile and to draw some lessons from the Chilean experience. The focus of the analysis is on the costs and benefits of the privatised system and its impact on social equity. Thus, the main section of the article is devoted to the analysis of the 20‐year‐old Chilean experience. This section is followed by a discussion of privatisation in other Latin American countries and the impact that World Bank's policies have had on the region. The last section looks at the lessons for the United States and argues against the establishment of a partially private plan in the USA.

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The impact of the COVID-19 pandemic threatens the viability of Chile's defined contribution (DC) pension system, undermining its financial foundation and exposing its vulnerability to political risk. The COVID-19 crisis led to the approval of three rounds of emergency withdrawals of 10 per cent of pension savings (as of April 2021). Utilizing pension funds during an economic crisis is neither new nor uncommonduring the Great Recession, several countries in Central and Eastern Europe diverted DC pension funds to cope with the fiscal stresses. As Chile prepares to draft a new constitution, debates about the efficiency and equity of the pension system are ongoing. In this regard, and as the political response to the pandemic demonstrates, the DC system has failed to live up to its promise of ending political risk and preventing the diversion of pension funds for other expenditures.