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KMID : 1023720130590010055
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Journal of Welfare for the Aged
2013 Volume.59 No. 1 p.55 ~ p.72
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Chile’s New Pension Reforms: Initiatives and Lessons
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Choi Ok-Geum
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Abstract
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Chile structually reformed their defined-benefit, Pay-As-You-Go, public pension systems, replacing them with defined contribution, fully funded, privately managed schemes based on individual accounts in 1981. After pension reform, a number of policy challenges leave including large groups of workers who are not covered and irregular worker participation rates, both of which could lead to inadequate retirement benefits. Also, the administrative fees the AFPs are charging account holders are high. To solve these problems, In 2008 Chilean pension reform includes measures to provide adequate benefits to a larger portion of the population, ensure more gender equity, encourage greater competition in the pension fund industry, change the rules for financing survivors and disability insurance, establish more opportunities for voluntary savings. This paper presents a brief overview of Chile`s individual account system and the major changes made to it in 2008. The paper then evaluates the major policy changes in 2008, and summarizes its lessons to our pension system.
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KEYWORD
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Privatization of pension system, 2008 Chilean Pension Reform, Solidary Pension
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