Chile

1
Chiles Private Pension Plan

• Who benefits?

By Nitish Rajbhandary, Catie Whelan, Kevin
Slattery
2
Introduction

1. Thesis Statement
2. History of Pension System in Chile
3. Benefits of the System
4. Problems with the System
5. Recommended Reforms
6. Conclusion

3
Thesis
Chiles private pension system functions well
when workers contribute on a regular basis.
However, the pensions plan fails vulnerable
groups such as women, unemployed, and self
employed workers.
4
History

• Pay-as-you-go-system
• Privatized under Pinochet in 1981
• Why was it privatized?
• Fiscal pressure
• Redistributive features
• How system functions

5
Types of Social Security
6
Benefits

• Reduce Government Obligations
• Encourages Savings
• Possible Economic Growth
• Employer may pay
• High Rates of Return

7
Returns
8
Returns
9
Problems

• Difficult to Diversify Holdings
• Competition
• AFP Commission Cost
• Coverage

10
Coverage
11
Coverage
12
Coverage
13
Reforms

• Labor Law Reforms
• Increase Holding Diversification
• Minimum Pension Guarantee
• Gender Reforms
• Default coverage for self-employed

14
Conclusion
Chiles pension system provides better coverage
than Social Security in the United States,
however it still needs some reforms in order to
cover everyone. Women, unemployed and
self-employed are the most at risk of not
receiving an adequate pension after retirement.
15
Works Cited

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• Bachelets citizens democracy. (2006, March 11).
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• Berstein, S., Larrain, G., Pino, F. (2006).
  Chilean pension reform Coverage facts and policy
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  American and Caribbean Economic Association,
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  EconLit database.
• Berstein, Solange, and Andrea Tokman. 2006.
  Mejores pensiones par alas mujeres una
  evaluación de políticas. En Foco 64. Santiago
  Expansiva.
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  Pension reform in Chile Closing the gap, not
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