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Is Latin America Retreating From Individual Retirement Accounts?

Author

Listed:
  • Fabio Bertranou
  • Esteban Calvo
  • Evelina Bertranou

Abstract

In 1981, Chile initiated old-age pension reforms that introduced mandatory funded individual retirement accounts (IRAs) and moved away from public systems. Beginning in the 1990s, ten other Latin American countries followed in Chile’s wake. In recent years, even before the onset of the financial crisis, a second round of pension reforms was initiated to strengthen the public component and address the problems created by individual accounts. The most extreme case of retrenching is Argentina, where IRAs were eliminated for mandatory contributions in late 2008. This country has gone back to a traditional defined-benefit pay-as-you-go scheme. This brief reviews the two rounds of pension reforms to determine whether Latin American countries are moving away from individual pensions. Even though this region is quite heterogeneous, its labor markets and social security systems share some common features, such as a large informal economy and a variety of uncoordinated institutions providing old-age income protection. The 2008-2009 financial crisis and economic recession is posing new challenges to systems that have introduced IRAs.

Suggested Citation

  • Fabio Bertranou & Esteban Calvo & Evelina Bertranou, 2009. "Is Latin America Retreating From Individual Retirement Accounts?," Issues in Brief ib2009-9-14, Center for Retirement Research, revised Jul 2009.
  • Handle: RePEc:crr:issbrf:ib2009-9-14
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    File URL: http://crr.bc.edu/briefs/is-latin-america-retreating-from-individual-retirement-accounts/
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    References listed on IDEAS

    as
    1. Joaquin Vial & Angel Melguizo, 2008. "Moving from Pay as You Go to Privately Managed Individual Pension Accounts: What have we learned after 25 years of the Chilean Pension Reform?," Working Papers 0805, BBVA Bank, Economic Research Department.
    2. Rafael Rofman & Leonardo Lucchetti & Guzmán Ourens, 2010. "Pension Systems in Latin America: Concepts and Measurements of Coverage," Documentos de Trabajo (working papers) 0510, Department of Economics - dECON.
    3. repec:idb:brikps:59998 is not listed on IDEAS
    4. Calvo, Esteban & Williamson, John B., 2006. "Old-Age Pension Reform and Modernization Pathways: Lessons for China from Latin America," MPRA Paper 4872, University Library of Munich, Germany, revised 2007.
    5. Augusto Iglesias-Palau, 2009. "Pension Reform in Chile Revisited: What Has Been Learned?," OECD Social, Employment and Migration Working Papers 86, OECD Publishing.
    6. Mesa-Lago, Carmelo, 2004. "Las reformas de pensiones en América Latina y su impacto en los principios de la seguridad social," Financiamiento para el Desarrollo 144, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    7. World Bank, 2007. "Argentina : Facing the Challenge of Ageing and Social Security," World Bank Other Operational Studies 7989, The World Bank.
    8. Barr, Nicholas & Diamond, Peter, 2008. "Reforming Pensions: Principles and Policy Choices," OUP Catalogue, Oxford University Press, number 9780195311303.
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    Cited by:

    1. Barrientos, Armando, 2011. "On the Distributional Implications of Social Protection Reforms in Latin America," WIDER Working Paper Series 069, World Institute for Development Economic Research (UNU-WIDER).
    2. Camila Arza, 2017. "The expansion of economic protection for older adults in Latin America: Key design features of non-contributory pensions," WIDER Working Paper Series 029, World Institute for Development Economic Research (UNU-WIDER).
    3. Rofman, Rafael & Oliveri, Maria Laura, 2012. "Pension coverage in Latin America : trends and determinants," Social Protection and Labor Policy and Technical Notes 70926, The World Bank.

    More about this item

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • H5 - Public Economics - - National Government Expenditures and Related Policies

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