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Uruguay, Options for Pensions Reform


  • Alvaro Forteza

    (Universidad de la República, Uruguay)


We simulate the budget of the main pension institution of the country, the Banco de Previsión Social (BPS), from 1995, the year the reform was passed, to 2050, when the new system should be mature. We perform several sensitivity analyses to evaluate which are the key exogenous variables and parameters determining the financial performance of the BPS in the medium to long run. According to our simulations, the budget of the BPS will be highly sensitive to the ages of retirement and to the ability and willingness of the institution to control the fulfilment of the required conditions to receive a contributory pension. The flexibility with which the BPS granted these benefits in the past had significant effects on its financial performance, according to these simulations. In recent years, the BPS has tightened the controls, with potentially significant effects on both the budget and the number of individuals excluded from the contributory programs. We study the contingent fiscal liabilities that are associated to the risk that the number of applications to the assistance programs grows because of the tougher conditions in the contributory programs. We also evaluate some alternatives to reform the non-contributory programs that, among other things, would extend their current coverage.

Suggested Citation

  • Alvaro Forteza, 2004. "Uruguay, Options for Pensions Reform," Public Economics 0406002, EconWPA.
  • Handle: RePEc:wpa:wuwppe:0406002
    Note: Type of Document - pdf; pages: 46. 46 pages, pdf

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    References listed on IDEAS

    1. Anna Caristo & Alvaro Forteza, 2003. "El déficit del Banco de Previsión Social y su impacto en las finanzas del gobierno uruguayo," Documentos de Trabajo (working papers) 0703, Department of Economics - dECON.
    2. Alvaro Forteza, 2002. "Un modelo macroeconómico de simulación para el Banco de Previsión Social," Documentos de Trabajo (working papers) 1202, Department of Economics - dECON.
    3. Carlos Gradín & Máximo Rossi, 2001. "The distribution of income in Uruguay: the effects of economic and institutional reforms," Documentos de Trabajo (working papers) 0301, Department of Economics - dECON.
    4. Alvaro Forteza, 2003. "Seguridad social y competencia política," Documentos de Trabajo (working papers) 0403, Department of Economics - dECON.
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    More about this item


    Pensions; Social Security;

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • H - Public Economics

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