Research & Analysis About Costa Rica
This article examines the recent reforms in individual account systems in Latin America, with a focus on the recent overhaul of the Chilean system and major reforms in Mexico, Peru, and Colombia. The authors analyze key elements of pension reform in the region relating to individual accounts: system coverage, fees, competition, investment, the impact of gender on benefits, financial education, voluntary savings, and payouts.
To date, more than 30 countries have established some form of individual accounts in their retirement systems. This article identifies those countries, categorizes how the individual accounts fit into their retirement income systems, and identifies some basic characteristics of the accounts. Because this analysis of individual accounts is intended to inform the current United States debate involving Social Security, the discussion is limited to countries in which such accounts are part or all of a mandatory retirement income program.
The new, partially privatized social security system adopted by Chile in 1981 has since been implemented, with some variations, in a number of Latin American and old-world transition economies with either a single- or multi-tier system. That alternative to a pay-as-you-go system is sometimes advocated as a desirable model for solving problems in developed systems, such as that of the United States. This article describes the new programs in Latin America, their background, and similarities and differences among them.