Pension benefits in Chile: is it possible to improve adequacy and solidarity?
نویسنده
چکیده
Chile revolutionized pension systems in 1981 by transforming its defined-benefit pay-asyou-go contributive system into a defined contribution privately managed fully-funded scheme. After 27 years, the fragmentation, low coverage and high costs of administering the private system led to a comprehensive reform to address these problems in 2008. The latter reform was a step forward in several ways: a social protection floor was established, the non-contributory and the contributory components were combined in an integrated system, and a significant increase in benefits coverage was reached. The reform, however, was insufficient: the system continues paying low benefits; coverage gaps have not been eliminated and significant benefit inequities remain. In 2014, only after six years after the last comprehensive reform, the government of President Bachelet convened a new advisory pension commission of national and international experts to recommend further changes to the system. The Commission delivered a report in 2015 that shows the challenges of returning to a path to improve the adequacy of benefits and rebuild social security solidarity mechanisms. Beyond some parametric reforms proposals to adjust the system to the demographic and labour context, major differences persist between two proposals: (a) keep the status quo of the current system with increases in tax financed benefits; and (b) transform it into a mixed system that includes a social insurance component. This article summarizes the trajectory, standing and challenges of Chile's pension system together with the dilemmas posed by the expert’s commission reform proposals.
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