The author offers a framework for an international comparison of charges in mandatory and private pension systems, and in state-run and privately managed systems. Such comparisons make it possible to determine which combinations of quality and cost make the most sense in pension services. He finds that: 1) 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 US; 2) comparing the collection function in different countries is difficult. In Chile, Malaysia and Zambia, the pension system must collect contributions on its own. In the US, the Social Security Administration piggybacks off the collection of federal income tax. A mandatory pension system could be used as a base for organizing other services, such as mandatory health care contributions and widely based income taxes, at a low marginal cost; 3) in the US, there is no reliable information on the cost of the active-life portion of social security; 4) Chilean AFPs (Administradoras de Fondos de Pensiones) charge slightly more for the active life portion of pension services than the international average for similar services, but appear to offer better quality service; and 5) marketing costs for Chilean AFPs -- which arise because of workers'freedom to select providers -- were just 6 percent of lifetime charges in 1991.
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