PAY-AS-YOU-GO OR PREFUNDED PENSION PLANS: A FALSE DILEMMA? A REVIEW OF EXPERIENCES IN LATIN AMERICA

Abstract

The reform processes of pension systems in Latin America, which began with the Chilean experience in 1981, have been characterized by aligning efforts to change their pension systems, in the sense of replacing solidarity pay-as-you-go schemes with individually funded accounts. These efforts have led to different reform modalities whose social and financial costs for both the state and the workers are just beginning to be seen, insofar as they are reforms whose effects are perceived in the long term, particularly with regard to whether the new schemes will provide better replacement rates or benefits than the old solidarity-based models. In any case, the debate suggests that at bottom it is a FALSE DILEMMA.