Are Old-Age Pension System Reforms Moving Away from Individual Retirement Accounts in Latin America?

Abstract

This article reviews two rounds of pension reforms in ten Latin American countries to determine whether they are moving away from individual retirement accounts (IRAs). Although the idea is provocative, we conclude that the notion of "going public" alone is insufficient to characterize the new politics of old-age pension reform.As opposed to the politics of enactment of IRAs of the late twentieth century, pension reform in Latin America in recent years has combined significant comeback of public components in old-age income support with improvement of IRAs. Clearly, the policy prescriptions that were most influential during the first round of reforms in Latin America have been re-evaluated. The World Bank and other organizations that promoted IRAs have recognized that pension reform should pay more attention to poverty reduction, coverage and equity, and to protect participants from market risks. The experience and challenges faced by countries that introduced IRAs, the changes in policies by international financing institutions, and the recent financial volatility and heavy losses experienced in financial markets may have tempered the enthusiasm of other countries from applying the same type of reforms. Scholars and policymakers around the globe could benefit from looking closely at these changes in pension policy.

The politics of pension reform reversal: a comparative analysis of Hungary and Argentina

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