Chilean Pension Reform: the Good, the Bad, and the In Between
IB#31
Introduction
In 1980, the Chilean pension system was in crisis. It was paying more in benefits than it was receiving in contributions, and the projected actuarial imbalance was greater than the country's Gross Domestic Product.1 The prescribed solution was to radically transform the traditional pay-as-you-go structure to a system based on personal retirement accounts. The Box on page two describes the main features of the current system. Nearly 25 years after the reform, it is possible to assess the Chilean experience...
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Mauricio Soto is a graduate student in economics at Boston College. The author is grateful to Jamie Lee for for excellent research assistance. The author also thanks Esteban Calvo and John Williamson for helpful comments on earlier drafts, and Peter Diamond, Alicia H. Munnell, Steven A. Sass, and Salvador Valdés-Prieto for guidance and suggestions that significantly improved this brief.