Chilean Pension Reform: the Good, the Bad, and the In Between

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…