Can defined contribution pensions survive the pandemic? The Chilean case

Kay, Stephen; Borzutzky, Silvia

doi:10.1111/issr.12286

Cited by 16 publications

(13 citation statements)

References 16 publications

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“…Meanwhile, while Chile is the richest, withdrawals have reached over 30 per cent. More recent analyses have suggested the capacity of withdrawals to undermine the private pillar (Kay & Borzutzky, 2022) but we have shown that not all withdrawals are similar and that whether they ultimately have that capacity will depend on the combination of policy legacies and institutions.…”

Section: Discussionmentioning

confidence: 65%

“…In Latin America, proposals were debated in countries like Mexico, Peru, Chile, Colombia and Bolivia (Financiero, 2020) but only a handful of them implemented withdrawal legislation. The reduction in pension savings (following withdrawals) raises important policy questions regarding the adequate level of future pensions (Arenas de Mesa, 2019; Rofman & Oliveri, 2012), but also the mix between the public and private pillars of pension systems and ultimately the sustainability of the latter (Kay & Borzutzky, 2022).…”

Section: Introductionmentioning

confidence: 99%

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The politics of pension policy responses to COVID-19: comparative insights from Chile, Bolivia and Peru

Carrera

Angelaki²

2022

J. int. comp. soc. policy

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The COVID-19 pandemic has sparked a debate around the world on whether pension systems should be used to support individuals in economic distress. In Latin America, Chile, Bolivia and Peru have passed legislation allowing withdrawals from pension pots, yet with some significant variation. We argue that these measures cannot be simply understood because of the COVID-19 emergency alone but should also take into consideration the combination of legacies from previous pension re-reforms and the political institutional setting. We find that where previous re-reforms have been difficult to implement or have not been implemented at all and the institutional setting makes change difficult, measures that lead to a significant amount of savings being withdrawn may be favoured by political actors as a way to break the stalemate. By contrast, where re-reforms have been largely implemented and the political institutional setting poses few barriers to change, withdrawals may be more limited.

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Section: Discussionmentioning

confidence: 65%

Section: Introductionmentioning

confidence: 99%

The politics of pension policy responses to COVID-19: comparative insights from Chile, Bolivia and Peru

Carrera

Angelaki²

2022

J. int. comp. soc. policy

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“…This research methodology of the current study is based on the works of Agarwal, Pan and Qian (2020), Lorca (2021), Kay and Borzutzky (2022), and Kim and Koh (2020) who they provided an analysis of pension withdrawals based on secondary data. They used existing survey soffered by the government regularly, statistical data for official institutions such as local banks, and open sources for the comparative regional analysis.…”

Section: Methodsmentioning

confidence: 99%

“…The main reason was the loss of jobs and unexpected expenses related to social issues such as health conditions and provision of living. Even though people withdrew money from their personal accounts, which in Chile is not regulated strictly by the government, thus making it more flexible, according to experts, will have an impact on the future (Kay &Borzutzky, 2022).…”

Section: Literature Reviewmentioning

confidence: 99%

“…This phenomenon can be considered unique since there have been no such updates to pension systems during COVID-19 observed in Chile and Kazakhstan. According to Chilean experts, this jeopardizes assistance to older people who may be left without support (Kay &Borzutzky, 2022). Opponents of this measure argue that the early withdrawal of pension savings is incompatible with the logic of the Chilean social security system.…”

Section: Introductionmentioning

confidence: 99%

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Advantages and Disadvantages of Early Withdrawal of Pension Savings: an Expert Assessment

Bekbossinova

Oshanova²,

Khassenova

et al. 2022

jour

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The purpose of this research is to study the positive and negative aspects of pension savings early withdrawal. A review of foreign experience and literature was conducted; the opinion of expert practitioners in economics, in particular, the financial sphere, was taken into account. Since the recent reforms carried out in the early withdrawal pension system have an impact on future pension payments, there is a need to study this issue. A qualitative research method was applied to determine the positive and negative aspects of the early withdrawal of pension savings using the QDA Miner Lite software. An analysis was carried out on the leading four indicators – factors, advantages and disadvantages, and government readiness. The international experience that has been analyzed shows that in any country, if contributors in their pension fund do not have enough savings to ensure an adequate level of replacement rate, then early withdrawal of funds is not allowed. Their further savings and investment are provided. The opinions of experts regarding the premature use of pension savings are divided. Suppose some believe this situation will lead to an imbalance in the pension system and insufficient pensions in the future. Others believe that it will improve the current well-being of the population. Experts also note that the efficiency of the UAPF will not improve in any way, and the effect on the economy and the population’s welfare will be indistinct and short-term. The results of the study can be used for further development of the pension system.

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Institutions

Barrientos

2024

Global Dynamics of Social Policy

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This chapter is concerned with the design, implementation, and outcomes of current social protection institutions in the region. It examines in turn the three core social protection institutions: occupational pensions, individual retirement savings plans, and social assistance. Occupational pensions in Latin America are restricted to selected groups of workers, mainly skilled workers in large firms. They are also highly fragmented and dependent on public subsidies, although the level of subsidies is increasingly contested. Recent trends in labour force participation in occupational pensions suggest stagnation during this century. Individual retirement savings plans are based on individual workers’ saving capacity. They were initially implemented in ten countries in the region, under different modalities. Individual retirement savings plans have not proved successful in the region, and it is fair to say their institutional structures are in transition. Social assistance greatly expanded in the new century. Most countries in the region have implemented large scale old age transfers and conditional income transfer programmes. By 2015, social assistance transfers reached around one third of the population in the region.

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Can defined contribution pensions survive the pandemic? The Chilean case

Cited by 16 publications

References 16 publications

The politics of pension policy responses to COVID-19: comparative insights from Chile, Bolivia and Peru

The politics of pension policy responses to COVID-19: comparative insights from Chile, Bolivia and Peru

Advantages and Disadvantages of Early Withdrawal of Pension Savings: an Expert Assessment

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