The Pension System of Cuba: the Current Situation and Implications of International Pension Reform Experiences for Addressing Cuba’s Problems

Systems of financial support for old people are experiencing serious financial difficulties worldwide and the old-age, disability, and survivors’ pension system of Cuba (the pension system from now on) is no exception to this trend. The pension system of Cuba has been extensively discussed in the literature by Mesa-Lago (see below) and it has also been analyzed in the 1994 and 1995 ASCE conferences by Buttari; Alonso, Donate-Armada and Lago; and Donate-Armada.2 The objective of this paper is to analyze the current situation of Cuba’s pension system; to review the proposals that have been advanced in the literature in recent years to strengthen the finances of pension systems throughout the world; to assess the experience of transition economies in reforming their pension systems; and to draw preliminary policy recommendations on how to reform the Cuban pension system. The first section of the paper presents the main characteristics of Cuba’s pension system: how it has evolved over the years, its coverage, the level of benefits, sources of financing, and the financial problems experienced in recent years. The second section reviews the recent literature regarding pension economics and reform proposals to address pension system problems, while the third reports on the pension reform experience of transition economies. The fourth section presents the paper’s conclusions about possible reform initiatives for the Cuban pension system.