IDEAS home Printed from
   My bibliography  Save this paper

Swiss Chilanpore : the way forward for pension reform?


  • Vittas, Dimitri


Many countries are considering far-reaching pension reform. This is happening in response to growing demographic pressures in some countries (especially in Western and Eastern Europe), to unsustainably generous benefits in others (especially in Latin America), or to failure to ensure the profitable investment of accumulated funds (as seems to be true with national provident funds in African countries). Given the worldwide interest in reform, one could ask: Is there a blueprint for pension reform? Can lessons learned in different countries be combined in a best-practice structure usable in different countries'pension systems? The author reviews the experience of Switzerland, Chile and Singapore, countries with relatively successful economies and pension systems. He suggests a multipillar pension system - which he dubs Swiss Chilanpore - that would blend the hard-headed softness of the Swiss, the expensive yields of the Chilean scheme, and the ruthless efficiency of Singapore. He emphasizes that: there is no perfect pension system - all systems suffer from the problems of moral hazard, adverse selection agency costs, and free riders; and all well-functioning pension systems require good government and good management. All pension systems have to cope with the problems of long-term uncertainty. For these reasons, the author favors a multipillar approach that diversifies across different providers. Swiss Chilanpore would have two compulsory and two voluntary pillars: a first pillar (drawn from the Swiss model) consisting of two parts, a flat-rate pension proportional to the length of a person's career and an earnings-related pension based on annual actualized lifetime earnings; a second pillar consisting of a central agency, which could be public or private, for record-keeping and other centralized functions, and private fund management companies for investing funds, the point being to keep operating costs down and achieve high investment returns; and third and fourth pillars based on occupational pension schemes and personal savings. The proposed structure would aim to combine the strengths and avoid the weaknesses of the three countries'systems, but the author cautions that no reform proposal would apply equally well in all countries, regardless of local circumstances and conditions.

Suggested Citation

  • Vittas, Dimitri, 1993. "Swiss Chilanpore : the way forward for pension reform?," Policy Research Working Paper Series 1093, The World Bank.
  • Handle: RePEc:wbk:wbrwps:1093

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Vittas, Dimitri & Iglesias, Augusto, 1992. "The rationale and performance of personal pension plans in Chile," Policy Research Working Paper Series 867, The World Bank.
    2. Davis, E.P. & DEC, 1993. "The structure, regulation, and performance of pension funds in nine industrial countries," Policy Research Working Paper Series 1229, The World Bank.
    3. Vittas, Dimitri & Skully, Michael, 1991. "Overview of contractual savings institutions," Policy Research Working Paper Series 605, The World Bank.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Prof. Dr. Robert Holzmann, 1994. "Funded and Private Pensions for Eastern European Countries in Transition?," Public Economics 9405004, EconWPA.
    2. Vittas, Dimitri, 1993. "Options for pension reform in Tunisia," Policy Research Working Paper Series 1154, The World Bank.
    3. Vittas, Dimitri, 1997. "The Argentine pension reform and its relevance for Eastern Europe," Policy Research Working Paper Series 1819, The World Bank.
    4. Robert Holzmann & Richard Hinz, 2005. "Old Age Income Support in the 21st century: An International Perspective on Pension Systems and Reform," World Bank Publications, The World Bank, number 7336.
    5. Leechor, Chad, 1996. "Reforming Indonesia's pension system," Policy Research Working Paper Series 1677, The World Bank.
    6. Vittas, Dimitri, 1993. "The simple(r) algebra of pension plans," Policy Research Working Paper Series 1145, The World Bank.
    7. Queisser, Monika & Bailey, Clive & Woodall, John, 1997. "Reforming pensions in Zambia : an analysis of existing schemes and options for reform," Policy Research Working Paper Series 1716, The World Bank.
    8. Vittas, Dimitri & Michelitsch, Roland, 1995. "Pension funds in Central Europe and Russia : their prospects and potential role in corporate governance," Policy Research Working Paper Series 1459, The World Bank.
    9. Queisser, Monika & Vittas, Dimitri, 2000. "The Swiss multi-pillar pension system : triumph of common sense?," Policy Research Working Paper Series 2416, The World Bank.
    10. Vittas, Dimitri, 1995. "Tunisia's insurance sector," Policy Research Working Paper Series 1451, The World Bank.


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:1093. 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: (Roula I. Yazigi). General contact details of provider: .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.