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The effect of Covid pension withdrawals and the Universal Guaranteed Pension on the income of future retirees in Chile

Author

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  • Carlos Madeira

Abstract

Chile implemented large pension withdrawals during the Covid pandemic. Afterwards, Chile increased non-contributory benefits in a quasi-universal scheme. Simulating future pensions, I show that the average loss in contributory pension income is 27.9%, with losses of 23.9% and 31.4% for men and women, respectively. After accounting for public transfers, the average loss in total pension income is just 6.2%, with losses of 7.5% and 5.2% for men and women, respectively. Current retirees lost just 1.1% of their pension income after accounting for the government transfers. The state may end up covering 92% of the total value of the pension withdrawals through increased transfers.

Suggested Citation

  • Carlos Madeira, 2024. "The effect of Covid pension withdrawals and the Universal Guaranteed Pension on the income of future retirees in Chile," BIS Working Papers 1176, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:1176
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    More about this item

    Keywords

    pension wealth; Covid pandemic; fiscal costs;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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