Download or read book The Structural Pension Reform in Chile written by Carmelo Mesa-Lago and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Chile pioneered a structural reform in Latin America that privatized its public pension system and influenced similar reforms in another nine countries. Twenty-five years later, this article evaluates the macroeconomic, microeconomic, and social effects of this reform in Chile and the other countries in the region, and extracts lessons from those experiences. Fiscal costs of the reform have been high and prolonged, exceeded capital accumulation, and had a negative impact on national savings, but Chile's reform has contributed to the development of capital markets; employer's contributions were eliminated or reduced in half of the countries and the worker's share in the total contribution averages 65 per cent; competition is afflicted by a small number of administrators and a high level of concentration; administrative costs are high and stagnant; capital returns are fair but declining; portfolio diversification has been achieved only in Chile and Peru; labour-force coverage has declined in all ten countries, and gender and income inequalities have expanded.

Download or read book Assessing Chile s Pension System Challenges and Reform Options written by Samuel Pienknagura and published by International Monetary Fund. This book was released on 2021-09-10 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: Chile’s pension system came under close scrutiny in recent years. This paper takes stock of the adequacy of the system and highlights its challenges. Chile’s defined contribution system was quite influential when introduced, and was taken as an example by other countries. However, it is now delivering low replacement rates relative to OECD peers, as its parameters did not adapt over time to changing demographics and global returns, while informality persists in the labor market. In the absence of reforms, the system’s inability to deliver adequate outcomes for a large share of participants will continue to magnify, as demographic trends and low global interest rates will continue to reduce replacement rates. In addition, recent legislation allowing for pension savings withdrawals to counter the effects from the COVID-19 pandemic, is projected to further reduce replacement rates and increase fiscal costs. A substantial improvement in replacement rates is feasible, via a reform that raises contribution rates and the retirement age, coupled with policies that increases workers’ contribution density.

Download or read book The Rise and Fall of the Privatized Pension System in Chile written by Andrés Solimano and published by Anthem Press. This book was released on 2021-02-18 with total page 124 pages. Available in PDF, EPUB and Kindle. Book excerpt: ‘The Rise and Fall of the Privatized Pension System in Chile’ focuses on the Chilean experience with a privatised pension system since the early 1980 when launched by the Pinochet regime. It explores economic, financial and political economy dimensions of a private pension system based on individual savings capacity implemented in a highly unequal country. The book also highlights the role played by the pension system as a mechanism of savings redistribution from wage earners and the self-employed to the funding of big corporations at home and abroad, in a process intermediated by profit-making pension fund management companies. The book compares the resilience of Chile’s private pension system with the reversals of the privatised pension system in recent years in countries of Latin America and Central-Eastern Europe. It outlines a program of structural pension reform towards a more progressive, public-based system.

Download or read book Pension Reform in Chile Revisited written by and published by . This book was released on 2009 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Lessons from Pension Reform in the Americas written by Stephen J. Kay and published by OUP Oxford. This book was released on 2007-11-22 with total page 448 pages. Available in PDF, EPUB and Kindle. Book excerpt: Latin American experiments with pension reform began when Chile converted its public pay-as-you-go system to a system of private individual accounts in the early 1980s. Several other Latin American countries then followed suit, inspired both by Chile's reforms and by World Bank recommendations stressing compulsory government-mandated individual saving accounts. Individual accounts were subsequently introduced in a number of countries in Europe and Asia. Many are now re-evaluating these privatisations in an effort to 'reform the reform' to make these systems more efficient and equitable. This volume is the first to assess pension reforms in this new 'post-privatization' era. After a discussion on demographic trends in the foreword by Nobel laureate Robert W. Fogel, Section 1 of the book includes chapters on the role of pension system default options, the impact of gender, and a discussion of the World Bank's policies on pension reform. The chapter on the evidence from Chile's new social protection survey points to key lessons from the world's first privatization. Section 2 offers in-depth analysis of several significant reform initiatives in the hemisphere, and includes chapters on the United States, Canada, Mexico, Costa Rica, Brazil, Peru, Uruguay and Argentina. The volume provides an unparalleled account of the lessons from pension reform in the Americas, addressing the most pressing policy issues and highlighting a broad range of country experiences.

Download or read book Pension Reform Options in Chile written by Marika Santoro and published by International Monetary Fund. This book was released on 2017-03-13 with total page 21 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, we study the macroeconomic impact of pension reform options in Chile, using a dynamic general equilibrium model. The main reform proposal considers raising contributions (employer side) and vehicle additional proceeds to individual accounts and to increase the support of solidarity pensions. We model increased contributions as a labor tax. We find the impact of this reform on GDP to be negative in the near to the medium run, with GDP declining by 0.5 percent by 2021, as a result of labor tax distortions which lead to a fall in labor supply, investment and to a loss in competitiveness. We also illustrate the main macroeconomics tradeoffs by analyzing alternative reforms, such as using revenues only to improve future pensions or a reform package funded by a mix of higher contributions and indirect taxes.

Download or read book Pension Reform Financial Market Development and Economic Growth written by Mr.Robert Holzmann and published by International Monetary Fund. This book was released on 1996-08-01 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Chilean pension reform of 1981, in which Chile moved from an unfunded to a funded scheme, is considered to have contributed to this country’s excellent economic performance since the mid-1980s. The paper highlights the theoretical underpinnings of the claimed economic effects and presents empirical data and preliminary econometric testing of the conjectured growth, capital formation, and saving effects. The empirical evidence is consistent with most of the claims. In particular, the direct impact of financial market development on private saving is found to be negative, which underscores the importance of sound fiscal policy and public saving to support the transition.

Download or read book Swiss Chilanpore written by Dimitri Vittas and published by World Bank Publications. This book was released on 1993 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: Swiss Chilanpore is a proposal for a pension reform strategy. It is based on a multipillar structure and aims to combine the best features of the pension systems of Switzerland, Chile, and Singapore - leaving behind their weaknesses.

Download or read book A Quarter Century of Pension Reform in Latin America and the Caribbean written by Carolin A. Crabbe and published by IDB. This book was released on 2005 with total page 417 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Political Economy of Pension Reform written by Evelyne Huber and published by Conran Octopus. This book was released on 2000 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt: Since pension schemes-along with health care and education-absorb the largest amount of social expenditure in all countries, their reform has a potentially major impact both on the fiscal situation of the state and on the life chances of citizens who stand to win or lose from new arrangements. This makes pension reform a highly controversial issue; and, except for the addition of new programmes and benefits, major restructuring of existing pension systems has been extremely rare in advanced industrial democracies. It was also rare in Latin America before the 1980s and 1990s. But there has been a great deal of experimentation within the region during the past decade. This paper examines the larger economic, social and political context of Latin American pension reform and compares experiences in different countries of the region with options available in Western European societies during the same period. The authors argue that the type of pension reform undertaken in Latin America has been an integral part of the structural adjustment programmes pursued by Latin American governments, under the guidance of international financial institutions (IFIs). Although there was a range of possible remedies to the problems of pension systems in different Latin American countries, neo-liberal reformers and the international financial institutions preferred privatization over all others. They claimed that privatization would be superior to other kinds of reform in ensuring the financial viability of pension systems, making them more efficient, establishing a closer link between contributions and benefits and promoting the development of capital markets-thus increasing savings and investment. And they were able to push through some of their suggestions for reform in spite of considerable opposition from pensioners, trade unions and opposition political parties. Interestingly enough, their pressure proved least effective in the more democratic countries of the region. In Costa Rica, for example, citizens preferred to reform the public system-eliminating the last pockets of privilege for public sector workers and ensuring that new levels of contribution would be adequate to provide minimum benefits for the aged and infirm. In Uruguay, citizens forced a public referendum, through which they rejected a proposal for privatization. At a later stage, they did permit the introduction of private investment accounts, but not at the cost of eliminating the public programme. In Argentina and Peru, after the legislature refused to authorize partial privatization, this was eventually pushed through by presidential decree. Only in Chile and Mexico has there been a complete shift to private pension funds-but, in both cases, influential sectors of the elite, including the military, have been allowed to keep their previous, publicly managed group funds. Looking at the only privatized pension system in existence long enough to allow for some assessment of its consequences-that of Chile-the authors find that many of the claims made by supporters of privatization are not substantiated by the evidence. The first discrepancy between neo-liberal predictions and the reality of Chilean pension reform has to do with efficiency. All previous claims to the contrary, private individual accounts have proven more expensive to manage than collective claims. In fact, according to the Inter-American Development Bank, by the mid-1990s administration of the Chilean system was the most expensive in Latin America. The second disproved claim involves yield. When administrative costs are discounted, privately held and administered pension funds in Chile show an average annual real return of 5.1 per cent between 1982 and 1998. Furthermore high fees and commissions-charged at a flat rate on all accounts-have proven highly regressive. When levied against a relatively modest retirement account, for example, these standard fees reduced the amount available to the account holder by approximately 18 per cent. When applied to the deposit of an individual investing 10 times more, the reduction was slightly less than 1 per cent. The third discrepancy involves competition. Although it was assumed that efficiency within the private pension fund industry would be associated with renewed competitiveness-while the public pension system represented monopoly-the private sector has in fact become highly concentrated. The three largest pension fund administrators in Chile handle 70 per cent of the insured. And to reduce advertising costs, public regulators are limiting the number of transfers among companies that any individual can make. A fourth unfulfilled promise of privatization in Chile has to do with expansion of coverage. It was assumed that the existence of private accounts would increase incentives for people to take part in the pension sc heme, but in fact this has not happened. Coverage and compliance rates have remained virtually constant. A fifth major claim was that the conversion of the public pension system into privately held and administered accounts would strengthen capital markets, savings and investment. But a number of studies have recently concluded that, at best, this effect has been marginal. And finally, the dimension of gender equity within a fully privatized pension scheme is being subjected to increasing scrutiny. Women typically earn less money and work fewer years than men. Therefore, since pension benefits in private systems are strictly determined by the overall amount of money contributed to them, women are likely to receive considerably lower benefits. Public pension systems, in contrast, have the possibility of introducing credits for childcare that reduce this disadvantage. Sweden is an example of countries that have embarked on this course. In the latter part of the paper, Huber and Stephens widen their comparative framework to include recent pension reforms in advanced industrial countries. There, where economic crisis was not as severe and where pressure from international financial institutions was not significant, much broader options for reform were available. In fact, although long-established systems were under stress, no developed country opted for complete privatization. Complex measures were taken to strengthen the funding base of national pension systems, including changes in investment procedures and changes in rules for calculating pension benefits. Reforms also increased retirement age, as well as the number of years required to qualify for a full pension. But even the most thoroughgoing reforms retained a central role for public schemes in ensuring old-age benefits. In conclusion, the authors consider steps that can be taken to craft pension reforms with more desirable results than those obtained to date in Latin America. They recommend measures that address the problem of an aging population by increasing the ability of each generation to pay for its own pensions-rather than relying primarily on the contributions of preceding generations of insured workers. Pension payments should be invested in a variety of financial instruments and benefits must ultimately be related to the yields obtained. Such a strategy does not require introduction of privately managed, individually held, investment funds. On the contrary, risk is lessened by relying instead on collectively managed funds, in which accounts can either be identified with individuals or-more equitably-with generations of contributors. Reformed public pension systems should also contain minimum "citizenship pensions" that guarantee subsistence income in old age to all individuals as a matter of right. Such a measure, financed from general tax revenue rather than from personal contributions, is not beyond the means of medium income countries in Latin America and the Caribbean. In fact, some Nordic countries introduced citizenship pensions when their GNP per capita was lower than that of most Latin American countries today.

Download or read book Pension Reform and Growth written by Giancarlo Corsetti and published by . This book was released on 1999 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: June 1995 Replacing a pay-as-you-go pension system with a fully funded scheme could eliminate the incentives (under the pay-as-you-go system) to informalize production and employment. Simulations of an endogenous-growth model suggest that long-term growth could increase substantially by such a reform. Econometric evidence suggests that pension reform in Chile in 1981 may be a factor in the increase in Chile's private savings since 1980. Corsetti and Schmidt-Hebbel review the qualitative macroeconomic and welfare implications of replacing a pay-as-you-go pension system with a fully funded scheme. They summarize the typically small effects found in the simulations literature, based on exogenous-growth one-sector models. Much larger, and sustained, effects are obtained in the framework of an overlapping-generations model with endogenous growth and formal-informal production sectors--the model presented in this paper. Model simulations using the overlapping-generations model suggest that replacing a pay-as-you-go system with a fully funded system could substantially raise long-term growth rates by eliminating the incentives (under the pay-as-you-go system) to informalize production and employment. A final look at Chile's reform experience suggests that a structural transformation toward formalization is taking place and that both private savings and growth have been rising substantially since 1980. Econometric evidence suggests that Chile's pension reform, in 1981, could be contributing toward Chile's large increase in private savings. This paper--a product of the Macroeconomics and Growth Division, Policy Research Department--is part of a larger effort in the department to understand macroeconomic and financial aspects of pension systems.

Download or read book Social Security Reforms in Chile written by Peter A. Diamond and published by . This book was released on 1993 with total page 84 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book After Chile What written by Olivia S. Mitchell and published by . This book was released on 1997 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: The apparent success of Chile's pension reform catalyzed a number of subsequent" reforms in sister Latin American nations, and the Chilean model' has now captivated the" attention of policymakers and researchers in the OECD as well. In this paper we identify six" critical elements of old-age pension reform, and examine how these six elements differ across the" Chilean reform, and several other Latin nations that followed in Chile's footsteps. We" emphasize how these other Latin American nations adopted different mechanisms to restructure" their old-age pension systems, and we highlight available evidence on system performance in" each case.

Download or read book Pension Reform in Latin America written by Armando Barrientos and published by Routledge. This book was released on 2018-12-20 with total page 397 pages. Available in PDF, EPUB and Kindle. Book excerpt: First published in 1998, this volume initially focused on Chilean pension reform, on which the author has published elsewhere, before moving onto Latin America more widely, with coverage extending from 1990 to the reform in Costa Rica and the Mexican pension reform in 1997. It emerged in the wake of reforms including in Peru (1993), Argentina and Colombia (1994) and Uruguay (1996). Particular focus is given to the new individual capitalization pension plans, along with arguments on the ignoring of pension schemes and its consequences, the connection of pension schemes to the labour market and the impact of pension schemes on the least advantaged. The Chilean model in particular has received praise from the IMF and the World Bank and these Latin American pension reforms will be of interest as a paradigm for other countries.

Download or read book The Chilean Pension Reform Turns 25 written by and published by . This book was released on 2006 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: "In 1980, Chile dramatically reformed its retirement system, replacing what was an old insolvent PAYGO program with a new structure that relies heavily on funded defined contribution individual accounts. In addition, eligibility and benefit requirements were standardized, and a safety net for old-age poverty was strengthened. Twenty-five years after this reform, the Chilean model is being re-assessed, in terms of coverage, contribution, investment, and retirement benefit outcomes. This paper introduces a recently-developed longitudinal survey of individual respondents in Chile, the Social Protection Survey (or Encuesta de Previsión Social, EPS), and illustrates some uses of this survey for microeconomic analysis of key aspects of the Chilean system"--National Bureau of Economic Research web site.

Download or read book The Chilean Pension Reform written by Sebastian Edwards and published by . This book was released on 1996 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the mid-1970s Chile initiated a deep market-oriented reform program aimed at opening up the economy, privatizing state owned enterprises and stabilizing the macroeconomy. In the 1980s Chile began to grow at increasingly rapid rates -- between 1986 and 1995 the average rate of growth bordered 7% --, becoming a star performer. Perhaps one of the most admired aspects of the Chilean program has been the reform of the pension system, which replaced an inefficient pay-as-you-go system with a privately administered defined contribution one. " This reform has been credited with helping develop Chile's capital market, with reducing government contingent liabilities and with helping boost Chile's traditionally anemic savings rate. The purpose of this paper is to analyze the most salient aspects of the Chilean program and to evaluate its achievements to date. The paper provides a brief background of the Chilean reforms effort and deals with Chile's old pay-as-you-go system, including its degree of (in)efficiency, its distributive characteristics and its fiscal consequences. The functioning of the new privately managed system is discussed in detail, and the system's results up to date are evaluated. I also discuss transitional issues, including the fiscal consequences of the reforms. Finally, the analysis also deals with the reforms effects on labor markets and savings

Download or read book Chile s Next Generation Pension Reform written by Barbara Kritzer and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In 1981, Chile was the first country to replace its public pay-as-you-go pension system with mandatory individual retirement accounts. This system has become a model for pension reformers around the world. Although Chile's system has undergone many changes since its inception, a number of policy challenges remained, including worker coverage, pension adequacy, gender equity, and administrative fees. A March 2008 comprehensive pension reform law addressed many of these issues by adding a basic universal pension, requiring the self-employed to join the individual account system, encouraging greater competition among pension fund providers, lowering administrative fees, providing financial incentives for women to work longer, allowing widowers to receive a survivor pension, dividing individual account assets between spouses in case of divorce or marriage annulment, expanding voluntary pensions, setting up a new administrative structure, and launching a new financial education program.