An appraisal of a quarter-century of structural pension reforms in Latin America

Abstract

Thi s article gives a comparative description of three different general structural pension reform models applied in 12 Latin American countries, analysing their key concepts. In its main part, it analyses and suggests policies to deal with the 11 challenges that must be faced in such reforms: the decline in labour force coverage; the growing failure to pay contributions; the faults due to imperfect competition among pension fund management companies; the continuing high level of administrative costs; the accumulation of capital, yet without solid evidence that this has had a positive impact on national saving; the high and prolonged fiscal cost of the transition; the potential development of the capital market but a lack of diversification in the investment portfolio; the variable real returns on investment; the lack of evidence that pensions are higher under the private than under the public system; the accentuation of gender-based inequities, and the erosion of solidarity.

Supplementary private pensions and saving: evidence from Spain

“…6 Note that this paper is exclusively focused on the effects of voluntary private pensions on saving. On the effect of this type of pension reform on saving see the survey of Mesa-Lago (2004) for Latin America and the Caribbean and the wider review of the Independent Evaluation Group (2006), a report prepared for the World Bank. On the theoretical impact of mandatory pensions on saving see, among many others, Feldstein (1974Feldstein ( , 1988, Kotlikoff (1979), Diamond and Hausman (1984) and Auerbach and Kotlikoff (1987).…”

The expansion of economic protection for older adults in Latin America : Key design features of non-contributory pensions

“…Structural pension reforms implemented in several Latin American countries from the 1980s onwards have not solved the problem. These reforms established privately administered individual accounts as a key component of the mandatory pension system to substitute for, or operate jointly with the public earnings-related system, and were implemented first Chile in 1981, and later Peru, Argentina, Colombia, Uruguay, Bolivia, Mexico, El Salvador, Costa Rica, Dominican Republic, and Panama (Madrid 2002;Mesa-Lago 2004. 2 To various degrees, they produced a shift in pension policy towards a new model based on individual savings, which linked benefits to contributions more strictly and involved substantial fiscal costs to pay for the transition from payas-you-go to funding.…”

“…Latin American pension systems were designed following a social insurance model that offers pension benefits to formal workers who pay contributions. From the 1980s, several countries implemented structural pension reforms that replaced existing public pay-as-you-go pension systems with privately administered individual accounts (Mesa-Lago 2004). While specific design features varied, the direction of reform was similar across countries: benefits were more closely linked to past contributions and a privately administered system of individual savings for old age was developed.…”

Zur freiwilligen Mitgliedschaft in Perus Rentensystem mit Individualkonten

“…Niedrige Deckungsniveaus und die Diskrepanz zwischen der Gesamtzahl der Mitglieder und derjenigen der tatsächlichen Beitragszahler im Pensionsfonds lassen ernsthafte Zweifel bezüglich der Angemessenheit der Leistungen im Alter aufkommen. Mesa‐Lago (2004) ist der Auffassung, dass die privaten Individualkontensysteme vor allem auf die Arbeitnehmer in den Städten im formellen Sektor zugeschnitten sind, die stabile Arbeitsplätze und überdurchschnittliche Löhne haben. Im formellen Sektor (d.h. in dem Bereich der Wirtschaft, der alle Bestimmungen der Handels‐ und Arbeitsgesetzgebung einhält) ist die Mitgliedschaft obligatorisch.…”