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The 2008 Chilean Reform to First-Pillar Pensions

Author

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  • Salvador Valdés-Prieto

Abstract

Chile approved in early 2008 the replacement of her two current non-contributory subsidies for the old poor for a unified program with a pioneering design, with phase-in ending in 2012. This paper describes the political economy of this reform and evaluates it with regards to efficiency and equity. The design is analogous to one adopted in Finland in 1957, with two differences: First, the subsidy withdrawal rate in response to the individual’s contributory pension benefit is lower, about 30% rather than 50%. Second, preserving a tradition introduced in 1975, benefits are also withdrawn in response to per capita household income.

Suggested Citation

  • Salvador Valdés-Prieto, 2009. "The 2008 Chilean Reform to First-Pillar Pensions," CESifo Working Paper Series 2520, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_2520
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    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp2520.pdf
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    References listed on IDEAS

    as
    1. Slemrod, Joel & Yitzhaki, Shlomo & Mayshar, Joram & Lundholm, Michael, 1994. "The optimal two-bracket linear income tax," Journal of Public Economics, Elsevier, vol. 53(2), pages 269-290, February.
    2. Hubbard, R Glenn & Skinner, Jonathan & Zeldes, Stephen P, 1995. "Precautionary Saving and Social Insurance," Journal of Political Economy, University of Chicago Press, vol. 103(2), pages 360-399, April.
    3. Laurence J. Kotlikoff, 1997. "It's high time to privatize," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 41(Jun), pages 293-296.
    4. Pablo Antolín & Howard Oxley & Wim Suyker, 2001. "How Will Ageing Affect Finland?," OECD Economics Department Working Papers 295, OECD Publishing.
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    Cited by:

    1. Salvador Valdés, 2008. "A Theory of Noncontributory Pension Design," Documentos de Trabajo 335, Instituto de Economia. Pontificia Universidad Católica de Chile..

    More about this item

    Keywords

    social security; welfare programs; political economy of reform;

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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