En this note, we highlight:

• One of the main causes of the difficulties in increasing the volumes of pension savings is found in the functioning of the labor market, but there are other relevant origins that explain this problem: public policies to face social contingencies, the design and interrelation between the different social protection programs and between the different pillars of the pension systems, the incentives and disincentives they introduce and the effect they generate on the valuation of working in the formal and informal sector. The note addresses this topic with the purpose of extracting lessons and proposals.

• Various studies have shown the lack of integration and complementarity between social programs due to the existence of disincentives to declaring true income, because the benefits perceived are reduced or lost when formal income increases. Additionally, these studies also show that measures that encourage participation in contributory pension programs need to be included in these programs. Based on this background, social programs:

1. Have to be properly interrelated.
2. Do not have to reward informality over formality.
3. Must have means-testing tools that ensure that benefits reach beneficiaries with the lowest administration costs.
4. Must avoid unnecessarily discouraging participation in contributory programs.
5. Must incorporate, as far as possible, rewards for participating in contributory programs and educational activities on the benefits they provide to workers.

• Although means testing instruments inevitably consider individual and family income, it is recommended that the criteria for accessing, reduction or elimination of benefits be gradual, based on income, without any abrupt changes. Efforts must also be made to provide the best possible information on the income received, integrating the information from the different public agencies. It is also important to consider all income when calculating the amounts of benefits to be received, and not only pension amounts.

• After the review of social pension programs in some Latin American countries, it was concluded that the design of non-contributory pensions discourages contributions to contributory pension programs in several countries. This is because it generates an implicit tax, considering that the increase in pension savings and obtaining a contributory pension causes the amount of non-contributory tax subsidies to be lost or reduced.

• Given the importance that the contributory pillars will acquire, it becomes necessary to study more broadly the effects that they can produce on the incentives to work in the formal market and to contribute to contributory programs.