Lessons for Asian Countries from Pension Reforms in Chile
AbstractChile's 1981 reform revolutionized pension design and created a system that was lauded and emulated widely. The main feature of the system was the creation of state-mandated, privately managed individual pension capitalization accounts based on contributions of employees. After nearly three decades of experience, there is a reassessment of the extent to which the pension system has achieved its objectives, particularly with respect to coverage and adequacy. In March 2006, the newly elected President Bachelet set up a Presidential Advisory Council on Pension Reform under the chairmanship of Mario Marcel to evaluate the existing pension system. This paper examines the rationale and the nature of the recommendations made by the Council. The analysis focuses on the structure of the proposed new pension system and risk-sharing implications of different pillars of the system, the accessibility of the existing pension system in terms of coverage, particularly for women and self-employed persons, the impact of reform on transaction costs; investment policies and management and their implications for rates of return and financial market development. The implications of the new system on pension design and policy debate in Asian countries are addressed. The paper suggests that must imbibe lessons from countries such as Chile and urgently undertake the task of constructing sustainable, robust and adequate pension systems and social safety nets.
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Bibliographic InfoPaper provided by Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University in its series PIE/CIS Discussion Paper with number 381.
Length: 77,  p.
Date of creation: Jun 2008
Date of revision:
Chile; Asia; Pension Reform;
Find related papers by JEL classification:
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
- G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
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- Alberto Arenas de Mesa & David Bravo & Jere R. Behrman & Olivia S. Mitchell & Petra E. Todd, 2006. "The Chilean Pension Reform Turns 25: Lessons From the Social Protection Survey," NBER Working Papers 12401, National Bureau of Economic Research, Inc.
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