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.

Extending coverage under the Argentinian pension system: Distribution of access and prospects for universal coverage

“…Certain Latin American countries, which have begun a new phase of structural reform following the privatization reforms of previous decades, have thus included the extension of coverage among their primary objectives (see Uthoff, 2010). In Chile, where a social assistance benefit for low‐income groups without coverage ( PASIS ) already existed, a new solidarity pension ( Pensión Básica Solidaria ) has been created for seniors without access to a contributory pension and whose income places them in the first three quintiles of the income distribution curve, and an additional benefit ( Aporte Previsional Solidario ) has been introduced for those with low levels of contributory benefits (Rofman, Fajnzylber and Herrera, 2009; Calvo, Bertranou and Bertranou, 2010; Délano, 2010; Arenas de Mesa, 2010). These benefits were introduced into the existing pension system in the form of a new pillar, with the aim of circumventing, both, the waiting lists which restrict access to non‐contributory benefits and the contribution requirements for access to a minimum benefit under the contributory system (Mesa‐Lago, 2009).…”

Radical Pension Reforms after the Crisis: A Comparative Analysis of Argentina and Greece

“…While the pension reform literature has analyzed the role of social partners in the reform process (see e.g., Carrera, Angelaki, and Carolo 2010;Madrid 2003;Natali and Rhodes 2007) during the recent crisis, the role and influence of external constraints (international financial markets) has increased in parallel with a decline of that of social partners to shape reform (Natali and Stamati 2014). In addition, the need to resort to a "quick fix" has limited the time available for consultation with social partners, as was the case during the reforms enacted in the 1990s.…”

“…Similar to Argentina, the 1990s were also a landmark for pension reform in Greece. Nonetheless, while reforms have been adopted almost every two years the structure of the pension system has essentially remained the same with reform being limited to housekeeping measures so as to minimize opposition from trade unions (Carrera, Angelaki, and Carolo 2010;Featherstone 2005;Sakellaropoulos and Angelaki 2007). Among the successive reform initiatives, the 2002 one stands out as an attempt to bring the mono (public)-pillar Greek pension system closer to a multipillar one through the development of a second funded pillar (Sotiropoulos 2004); yet the transition has remained on paper as the development of the second pillar has been embryonic representing in 2008 a little less than 0.3 percent of GDP (Petmesidou 2009).…”

La expansión de la cobertura del sistema argentino de pensiones: distribución del acceso y perspectivas para la universalización

“…En algunos países latinoamericanos una nueva fase de reformas estructurales posteriores a las privatizaciones de las décadas previas incluyeron la expansión de la cobertura como objetivo fundamental (véase Uthoff, 2010). En Chile, donde existía una pensión asistencial focalizada (PASIS) para las personas de bajos ingresos sin cobertura, se creó un nuevo beneficio, la Pensión Básica Solidaria, orientado a las personas mayores ubicadas en los tres primeros quintiles de la distribución del ingreso que no tuvieran acceso a una pensión contributiva, y un beneficio adicional (el Aporte Previsional Solidario) para quienes tuvieran prestaciones contributivas bajas (Rofman, Fajnzylber y Herrera, 2009; Calvo, Bertranou y Bertranou, 2010; Délano, 2010; Arenas de Mesa, 2010). Estos beneficios se instituyeron como un nuevo pilar del sistema de pensiones vigente, evitando tanto las listas de espera que restringían el acceso a las prestaciones no contributivas como los requisitos contributivos que existían para acceder al beneficio mínimo del sistema contributivo (Mesa‐Lago, 2009).…”