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FIAP > Boletín – Recientes > Progress of the Pension Systems No. 1 – December 2020 – January 2021
18 February, 2021

Progress of the Pension Systems No. 1 – December 2020 – January 2021

  • Crisis in the PAYGO systems worldwide. In Ecuador, between December 2019 and December 2020, the Ecuadorian Social Security Institute (IESS) lost 269,478 contributors, while the number of retirees increased by 24,412. To finance only the pension payment deficit, the IESS will use USD 697.9 million of the savings it has invested through the IESS Bank. In Panama, specialists warn that the country is facing a serious problem, pointing out that the existing pension model is bankrupt and it is impossible to pay all pensions. For its part, in Paraguay, The Pensions and Retirement Fund ended 2020 with a 30% deficit, while only 10% of pensioners who contribute to the pension system actually retire, because the rest of them do not qualify for retirement. In Spain, According to BBVA Research figures, the deficit of the pension system would be 3.2% of GDP in 2020, equivalent to more than 35 billion euros.
  • Chile: The Pension Fund Managers (AFPs) are drawing up a document with a number of proposals for improving the pension system. Among other things, they propose: making it mandatory for all self-employed people to contribute, raising the retirement age, raising the contribution rate to levels similar to those of the OECD countries (about 20%) and strengthening the Solidarity Pillar.
  • Costa Rica: The Costa Rican Social Security Fund (CCSS) will define the reform to the Disability, Old Age and Death (IVM, PAYGO) regime in the first quarter of 2021. The proposed changes range from raising contributions to the fund from the current 10.66% to 15.16%, reducing pension amounts and eliminating early pensions.
  • Peru: The Ipsos Survey reveals that 82% of AFP members are against the Peruvian State being the sole administrator of the pension system. 80% said they preferred to choose a private manager for their funds, and 66% of members also believe that their pension will be reduced if the State manages the pension system again.
  • Latin America: The 2020 Mercer CFA World Pension Index shows that Latin America has significant pension challenges. According to the report, Chile ranks 13th overall with 67 out of 100 possible points, and is included in the category B countries. Further behind, in category C, are Colombia ranked 21st, with 58.5 points; Peru 24th, with 57.2 points and Brazil 26th, with 54.5 points. Mexico ranks 35th, with 44.7 points and Argentina ranks second-last with only 42.5 points, in category D.
  • To download the full document, please click here.
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