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Annuity markets and benefit design in multi-pillar pension schemes : experience and lessons from four Latin American countries


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  • Palacios, Robert
  • Rofman, Rafael


A growing number of countries have introduced mandatory defined contribution schemes. As these schemes mature, their success will increasingly depend on how well they translate accumulated funds into a stream of retirement income. Successful reforms will rely on a well regulated, and competitive insurance sector. They will strike a balance between individual preferences, and public policy objectives, such as providing a reasonable amount of longevity insurance. This paper describes the benefit stage in four Latin American countries, and presents preliminary evidence on their emerging annuities markets. We find that these markets are less transparent than they should be, and that supervision is less strict than during the accumulation period. Annuities markets will grow dramatically in the coming decades as the reforms mature. Growth depends on policy variables, such as the use of recognition bonds, as well as initial conditions. The markets in Peru and Colombia, will be much smaller than those in Chile and Argentina, in both absolute, and relative terms. The immaturity of the schemes, and temporarily limited flow of new pensioners, should be viewed as a window of opportunity for improving supervision, increasing transparency, and educating workers.

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Bibliographic Info

Paper provided by The World Bank in its series Social Protection Discussion Papers with number 23159.

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Date of creation: 31 Mar 2001
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Handle: RePEc:wbk:hdnspu:23159

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Keywords: Insurance&Risk Mitigation; Pensions&Retirement Systems; Non Bank Financial Institutions; Environmental Economics&Policies; Banks&BankingReform;


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  1. Patrick J. Bayer & B. Douglas Bernheim & John Karl Scholz, 1996. "The Effects of Financial Education in the Workplace: Evidence from a Survey of Employers," NBER Working Papers 5655, National Bureau of Economic Research, Inc.
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Cited by:
  1. Impavido, Gregorio & Thorburn, Craig & Wadsworth, Mike, 2004. "A conceptual framework for retirement products : Risk sharing arrangements between providers and retirees," Policy Research Working Paper Series, The World Bank 3208, The World Bank.
  2. Ben Braham, Mehdi, 2004. "L’avenir des retraites en Tunisie : Leçons des expériences étrangères," Economics Papers from University Paris Dauphine, Paris Dauphine University 123456789/6253, Paris Dauphine University.
  3. Acuna R., Rodrigo & Iglesias P., Augusto, 2001. "Chile's pension reform after twenty years," Social Protection Discussion Papers, The World Bank 24079, The World Bank.
  4. Rofman, Rafael, 2000. "The pension system in Argentina - six years after the reform," Social Protection Discussion Papers, The World Bank 23089, The World Bank.


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