International comparisons offer the potential to uncover dominant combinations of quality and cost in pension services. We offer a framework for international comparison of charges in mandatory and private pensions, and in state-run versus privately managed systems. We find that charges in the private annuity industry are much higher than other components of the pension package, and much higher than publicly provided annuities in the United States. We find that costs of Chilean AFPs for the active life portion of pension services are above the international average for similar services, but their charges are lower. Marketing costs in Chilean AFPs, which arise because of the freedom to select providers granted to workers, were just 26% of lifetime charges in 1991. In the case of the U.S., there is no reliable information on the costs of Social Security for the active life portion.
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Article provided by Instituto de Economía. Pontificia Universidad Católica de Chile. in its journal Cuadernos de Economía.
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