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Individual pension savings accounts in Latin America promised to improve compliance and raise benefits in a cost-effective manner, while at the same time raising savings rates, which would in turn promote economic growth. A review of the evolution of pension reform in Latin America shows results to have been mixed. Analyses of the recent reforms generally fail to consider the extent to which the success or failure of pension systems is driven by exogenous factors, including macroeconomic and labour market conditions, and institutions. A number of recent studies have issued a reassessment of the region's reforms that stresses the importance of a basic guaranteed pension benefit and recognizes that a range of alternatives are viable in the region.Pension systems based on individual accounts are undergoing a thorough reevaluation.I n di vid ual ac counts were pre sented as a pan a cea for Latin Amer ica, but the re sults have been mixed. Re form pro pos als were based upon a cri tique of the ex ist ing de fined ben efit pay-as-you-go (PAYG) model that was of ten de scribed as in ef fi cient, in ad e quate, and a drag on eco nomic growth. Without ex pand ing the base of con tri bu tors, such programmes raised pay roll taxes as ben efits stag nated, and were char ac ter ized by re gres sive re dis tribu tion. Tra di tional PAYG sys tems were also crit i cized for not gen er at ing sav ings, which low ered po ten tial GDP growth. 3The views ex pressed in this ar ti cle are those of the au thors and do not re flect the views of the Fed eral Re serve Bank of At lanta, the US Fed eral Re serve Sys tem, or the Bra zil ian Min is try of So cial In sur ance.
Individual pension savings accounts in Latin America promised to improve compliance and raise benefits in a cost-effective manner, while at the same time raising savings rates, which would in turn promote economic growth. A review of the evolution of pension reform in Latin America shows results to have been mixed. Analyses of the recent reforms generally fail to consider the extent to which the success or failure of pension systems is driven by exogenous factors, including macroeconomic and labour market conditions, and institutions. A number of recent studies have issued a reassessment of the region's reforms that stresses the importance of a basic guaranteed pension benefit and recognizes that a range of alternatives are viable in the region.Pension systems based on individual accounts are undergoing a thorough reevaluation.I n di vid ual ac counts were pre sented as a pan a cea for Latin Amer ica, but the re sults have been mixed. Re form pro pos als were based upon a cri tique of the ex ist ing de fined ben efit pay-as-you-go (PAYG) model that was of ten de scribed as in ef fi cient, in ad e quate, and a drag on eco nomic growth. Without ex pand ing the base of con tri bu tors, such programmes raised pay roll taxes as ben efits stag nated, and were char ac ter ized by re gres sive re dis tribu tion. Tra di tional PAYG sys tems were also crit i cized for not gen er at ing sav ings, which low ered po ten tial GDP growth. 3The views ex pressed in this ar ti cle are those of the au thors and do not re flect the views of the Fed eral Re serve Bank of At lanta, the US Fed eral Re serve Sys tem, or the Bra zil ian Min is try of So cial In sur ance.
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