Assessing Chile's Pension System: Challenges and Reform Options

By Samuel Pienknagura, Christopher Evans

September 10, 2021

Preview Citation

Format: Chicago

Samuel Pienknagura, and Christopher Evans. Assessing Chile's Pension System: Challenges and Reform Options, (USA: International Monetary Fund, 2021) accessed December 3, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Chile’s pension system came under close scrutiny in recent years. This paper takes stock of the adequacy of the system and highlights its challenges. Chile’s defined contribution system was quite influential when introduced, and was taken as an example by other countries. However, it is now delivering low replacement rates relative to OECD peers, as its parameters did not adapt over time to changing demographics and global returns, while informality persists in the labor market. In the absence of reforms, the system’s inability to deliver adequate outcomes for a large share of participants will continue to magnify, as demographic trends and low global interest rates will continue to reduce replacement rates. In addition, recent legislation allowing for pension savings withdrawals to counter the effects from the COVID-19 pandemic, is projected to further reduce replacement rates and increase fiscal costs. A substantial improvement in replacement rates is feasible, via a reform that raises contribution rates and the retirement age, coupled with policies that increases workers’ contribution density.

Subject: Aging, Expenditure, Gender, Labor, Pension spending, Pensions, Population and demographics, Retirement, Women

Keywords: Aging, Contribution rate, Fiscal cost, Global, Pension spending, Pensions, Reform option, Replacement rate, Retirement, Savings withdrawal, Women

Publication Details

Pages:

52
Volume:

---
DOI:

---
Issue:

---
Series:

Working Paper No. 2021/232
Stock No:

WPIEA2021232
ISBN:

9781513596112
ISSN:

1018-5941

FACTSHEETS

RESOURCES

TOPICS

Flagship Publications

Other Publications

IMF reports and publications by country

Regional Offices

All News

See Also

For Journalists

Press Center

RESOURCES

FLAGSHIPS

KEY SERIES

IMF NOTES

IMF Working Papers