IDEAS home Printed from
MyIDEAS: Login to save this article or follow this journal

Chilean Pension Reform: Coverage Facts and Policy Alternatives

  • Francisco Pino


  • Solange Berstein
  • Guillermo Larraín

As opposed to defined benefit pension schemes, which are showing sustainability problems around the world, individual capitalization systems are seen as financially solvent. However, there has been some controversy during the last years with respect to this system´s ability to provide adequate pensions. Nevertheless, in any contributory system, defined benefit or defined contribution, the performance of labor markets is crucial. The lack of contributions in the first case would imply financial problems (or exclusion) and lower pensions in the second. This article presents an analysis of how different variables affect the pension level in an individual capitalization scheme, assessing their relative importance. Then, individual level administrative data combined with survey information, is used to project pension benefits. The results show that a considerable percentage of the population would not be able to self-finance an old age pension higher than the level of the minimum pension guarantee, in expected terms. Moreover, most of them would not be entitled to get state funding to obtain a pension of that amount. However, the heterogeneity of individuals implies that there are very different situations and that not all of those who receive a low pension are vulnerable when old. There are cases in which individuals have other types of savings or, in the case of women; they might live of their husband´s pension or widow pension benefit if diseased. Additionally, two possible reforms are explored, and their potential impact is evaluated-the default contribution for self-employed and the extension of the minimum pension guarantee for a broader range of contribution periods, not just 20 years.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no


Volume (Year): (2006)
Issue (Month): (January)

in new window

Handle: RePEc:col:000425:008649
Contact details of provider:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:col:000425:008649. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roberto Bernal)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.