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Pooling, Savings, and Prevention: Mitigating the Risk of Old Age Poverty in Chile

Autor: Packard, Truman G.
Año: 2002
Resumen: Using data collected in a survey on risk, and social insurance in Chile, the author funds that workers who entered the labor market after the pension reform of 1981, have a greater "contribution density" than those who contributed to the previous social security system. Further, the expectation of care from children, and the amount spent on their education, significantly lowers the likelihood of contribution to the pension system. Workers who have met the contributory requirements to qualify for the minimum pension guaranteed by the government, are significantly less likely to continue making contributions. The likelihood of contributions beyond the eligibility threshold being lowered further, the greater the market rental value of respondents' homes. Furthermore, individuals with a greater tolerance for risk contribute, suggesting that there are retirement security investments in Chile, that are perceived as relatively less risky than saving in the reformed pension system. The results indicate that housing could be one such investment.

Fuente: Banco Mundial
Clasificación: Regulación y Supervisión
Tipo de Publicación: Documentos de Trabajo
Idioma:

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Revealed Preference and Self-Insurance: Can We Learn from the Self-Employed in Chile?

Autor: Barr, Abigail ; Packard, Truman
Año: 2002
Resumen: Financial sector development is a critical area of effective social protection policy. A well-regulated financial sector can complement government efforts to keep households from falling into poverty - by supplying the instruments needed to pool risks, or to self-insure against losses because of the death, or disability of a household member, unexpected loss of employment, or inability to work in old age. But many of the policy recommendations that can be drawn from the social risk management framework, rest on the strong assumption that risk, and time preferences are uniform across individuals, or households. Policies meant to encourage participation in public pension systems, and to reduce evasion where such systems are mandatory (by more closely aligning benefits with payroll contributions, or introducing individual retirement accounts) implicitly attempt to emulate the savings behavior of individuals, and households faced with fully functioning capital markets, and perfect information. If no allowance is made for variation in preferences, however, the welfare effects of policy reforms will vary across the target population. Mandated social security, even if actuarially fair for most, is likely to impose welfare losses on those less inclined to save, and insure. That said, a clearer picture of individual and household preferences, and how they vary across the population, can help governments design social security systems that complement private savings, and insurance instruments. The authors present the results of a field experiment, designed to produce an empirical measure of risk aversion, and time preferences of selected groups in Chile, which in 1981 pioneered social security reform with a transition to individual retirement accounts. The experiment was designed primarily to establish whether the time, and risk preferences of the self-employed differ significantly from those of wage, and salaried workers. They find no significant differences in mean risk, and time preferences between the self-employed, and employees, or between the contributing, and non-contributing employees. But they find significant differences in these preferences between the contributing, and non-contributing self-employed. Among the self-employed, those who are more patient choose to contribute to the pension system. However, the contributing self-employed are significantly more tolerant of risk than the non-contributing self-employed, a finding that conflicts with the assumption that the formal pension system is the only source of insurance against poverty in old age. The Chilean pension system may be viewed with some trepidation by its pool of potential clients. Since risk aversion declines with education, the participation of the economically active who are free to choose, could be enhanced by a campaign carefully designed to raise awareness, allay fears, and inform people of the benefits of saving for retirement in the formal pension system.

Fuente: Banco Mundial
Clasificación: Seguridad Social y Sistemas de Pensiones
Tipo de Publicación: Documentos de Trabajo
Idioma:

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Mercados de trabajo y sistemas de pensiones

Autor: Uthoff, Andras
Año: 2002
Resumen: América Latina experimenta un proceso simultáneo de envejecimiento de la población y de precarización del empleo que desafía a los sistemas de pensiones contributivos. Los pilares de reparto ven afectada su solvencia por seculares descensos en el número de personas activas que contribuyen a financiar los beneficios de las personas retiradas. Los beneficios de los pilares de capitalización individual son sensibles a la densidad de cotización necesaria para acumular capitales y financiar pensiones por un período cada vez más largo de sobrevivencia del afiliado. El presente trabajo ilustra la forma en que este desafío se manifiesta en la actualidad, y explora las responsabilidades que tendrá la sociedad en su superación.

Fuente: Comisión Económica para América Latina (CEPAL)
Clasificación: Mercado Laboral
Tipo de Publicación: Documentos de Trabajo
Idioma:

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Gender Effects of Social Security Reform in Chile

Autor: Cox Edwards, Alejandra
Año: 2002
Resumen: In 1981 Chile replaced a mature government-run social security system that operated on a pay-as-you-go basis with a privately managed system based on individual retirement accounts. The new system is more fiscally sustainable because pension benefits are defined by contributions. The minimum pension guaranteed to beneficiaries with at least 20 years is funded from general taxes, preserving the tight matching between contributions and benefits. The new system also eliminates several cross-subsidies. Men and women with less than secondary education gain under the new system, but single women with more education lose. Comparison of the old and the new systems reveals a complex set of factors that cause gender effects given constant behavior or change behavior across genders.

Fuente: Banco Mundial
Clasificación: Reformas de Pensiones
Tipo de Publicación: Artículo Académico
Idioma:

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Policies to Promote Saving for Retirement: A Synthetic Overview

Autor: Vittas, Dimitri
Año: 2002
Resumen: The author argues that public and private pillars are essential for a well-functioning pension system. Public pillars, funded or unfounded, offer basic benefits that are independent of the performance of financial markets. Since financial markets suffer from prolonged, persistent, and large deviations from long-term trends, they cannot be relied on as the sole provider of pension benefits. Funded pillars provide benefits that are based on long-term capital accumulation and financial market performance. But they need to be privately managed to minimize dependence on public sector institutions and avoid government dominance of the economy and financial markets. The author focuses mainly on the promotion, structure, and regulation of funded pillars. He discusses the case for using compulsion and tax incentives, for exempting some categories of workers such as the very young (under 25), the very old (over the normal retirement age), the very poor (those earning less than 40 percent of the average wage), and the self-employed, and for offering a credit transfer to be added to individual capitalization accounts to encourage participation by lower-income groups. A robust regulatory framework with a panoply of prudential and protective rules covering "fit and proper" tests, asset diversification and market valuation rules, legal segregation of assets and safe external custody, independent financial audits and actuarial reviews, and adequate disclosure and transparency would be essential. An effective, proactive, well-funded, and properly staffed supervision agency would be necessary. Tight investment rules could initially be justified for countries with weak capital markets and limited tradition of private pension provision. But in the long run, adoption of the "prudent expert" approach with publication of "statements of investment policy objectives" (SIPOs) would be preferable and more efficient. Various guarantees covering aspects such as minimum pension levels and relative investment returns need to be provided to protect workers from aberrant asset managers and insolvency of annuity providers, but care must be taken to address effectively the risk of moral hazard. The author also argues for greater individual choice, including the creation of a dual regulatory structure. One part would involve heavy regulation with constrained choice of investment funds, limits on operating fees and on account switching, and strong government safeguards and guarantees. This would cater to those workers with low risk tolerance. The other part would be more liberal but based on strong conduct rules. It would offer greater choice of investment funds, allowing multiple accounts and liberal account switching, impose no limits on operating fees, and providing no or fewer state guarantees. This would cater to workers seeking a higher return and who are willing to tolerate a higher level of risk.

Fuente: Banco Mundial
Clasificación: Ahorro Previsional
Tipo de Publicación: Documentos de Trabajo
Idioma:

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