The New Wave of Pension Reforms in Latin America

Mesa‐Lago, Carmelo; Valero, Diego

doi:10.1007/978-3-030-37912-4_12

Cited by 13 publications

(9 citation statements)

References 5 publications

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“…If a system is not seen as beneficial by the electoral majority, namely, if it does not help them maintain their pre-retirement living standards, it could be voted out (Bradley et al, 2016;Grech, 2018). After this process, the risk premium can address many forms, including increasing the social security financial transfers, imposing minimum pension guarantee, and even government obligation to an adequate benefit level (Mabbett, 2020;Altiparmakov, 2018;Mesa Lago, and Valero, 2020).…”

Section: The Individual's Expectationsmentioning

confidence: 99%

“…However, 19 countries, 13 in Eastern Europe and 6 in Latin America, reversed privatization, 60% of the countries that had privatized pension reversed privatization. Five other Latin American countries have strengthened the zero pillar of minimum pension guarantee (Mesa Lago and Valero, 2020).…”

Section: Why Cee Countries?mentioning

confidence: 99%

“…The increased role of supplementary pension funds and the recent economic and financial downturn have led to new challenges about future financial sustainability and pension benefits' adequacy. Now it is clear that the direction of pension reforms appears to have changed again, with many countries reversing the policies they adopted in the 1980s and 1990s (Arza, 2008;Ebbinghaus, 2015;Mesa Lago and Valero, 2020; Barr and Diamond, 2016;Thalassinos et al, 2019;Cristea and Thalassinos, 2016).…”

Section: Introductionmentioning

confidence: 99%

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Pension Reforms and Risk Sharing Cycle: A Theory and Global Experience

Wolf¹,

Lorena²

2021

IJEBA

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Purpose: This paper offers an explanation to pension systems cyclical reforms, based on Central East Europe (CEE) countries experience over the last three decades. Design/Methodology/Approach: This paper develops a theory of risk sharing process and demonstrate it based on global experience over the last two decades. Finding: During the transition to funded pension design, the government not only transfers longevity and fiscal risks to the individual but also absorbs risks transferred from the public, where each market actor transfers undiversifiable risks to the other. The outcomes of this risk path realized in financial transfers, such as social security, means-tested and minimum pension guarantee. Consequently, funded pension designs naturally converge to a new landscape paradigm of risk sharing, including intergenerational and intra-generational play. Financial crises such as the recent COVID-19 pandemic foster the convergence process. Practical Implications Governments and central planners have to consider risk sharing mechanisms to ensure sustainability of pension designs during the transitions to funded schemes. Originality/Value: To the best of the author's knowledge, no other paper attempted to study the bi-path ways of risk during the pension transition and discover the mutual expectation of the pension market actors. There is a vast literature of risk sharing study in comparison between funded and unfunded pension schemes.

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Section: The Individual's Expectationsmentioning

confidence: 99%

Section: Why Cee Countries?mentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Pension Reforms and Risk Sharing Cycle: A Theory and Global Experience

Wolf¹,

Lorena²

2021

IJEBA

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“…After this process, the risk premium can address many forms, including increasing the social security financial transfers, imposing minimum pension guarantee, and even government obligation to an adequate benefit level (Mabbett 2020;Altiparmakov 2018;Mesa Lago and Valero 2020).…”

Section: The Individual's Expectationsmentioning

confidence: 99%

“…The rereforms reinforced the government role in the administration, regulation, and supervision of the pension systems. Most of the countries after re-reforms, such as Poland, Hungary, and Kazakhstan created autonomous bodies for the regulation and supervision of private pensions (Mesa-Lago and Valero, 2020).…”

Section: 2mentioning

confidence: 99%

The Expectation for Risk-Sharing Cycle: Theoretical Model and Global Implementation

Wolf¹

2021

TURCOMAT

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In this paper, we offer an explanation to pension systems cyclical reforms, based on Central East Europe (CEE) countries experience over the last three decades. We claim that in the transition to funded pension design, the government not only transfers longevity and fiscal risks to the individualbut also absorbs risks transferred from the public, where each market actor transfers undiversifiable risks to the other. This hidden risk path that has not been discussed yet in the literature, stemmed from the public expectation to risk premium or adequate old age benefits that evolves to political pressure. The outcomes of this risk path realized in financial transfers, such as social security, means-tested and minimum pension guarantee. Consequently, funded pension designs naturally converge to a new landscape paradigm of risk sharing, including intergenerational and intra-generational play. Financial crises such as the recent COVID-19 pandemic foster the convergence process.

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