Some Features on Current Pension System Reform in Latin America

Abstract

The heterogenous nature of their population is an important feature of Latin American and Caribbean countries. Overall demographic transition is late and lagged within countries in some population groups: aging is taking place at a relatively fast pace, with yet a large share of the labour force in informal sector with no social security coverage and also growing at high rates. The challenge to pension systems is to improve their performance within societies with a large incidence of poverty, emerging (and some times incipient) capital markets, and increasing demands for benefits. Reform alternatives in Chile, Argentina and Colombia show that their profiles differ as the result of decisions about the adequate weighting of costs and gains in the transition from a pay-as-you-go scheme to a full funded one.