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FIAP > Boletín – Recientes > Pensions Note No. 24 “Non-contributory pension programs in Latin America” – April 2018

Pensions Note No. 24 “Non-contributory pension programs in Latin America” – April 2018

15 June, 2018
  • The low coverage of the contributory pension systems has driven the expansion of the non-contributory pension programs in Latin America. The number of countries with non-contributory pension systems in Latin America and the Caribbean increased from 8 to 26 between 1990 and 2016.
  • Non-contributory pensions, as their name implies, are those that do not require prior social security contributions. These pensions are usually financed by general State revenue.
  • Non-contributory pension programs must be carefully designed so as not to discourage contribution to contributory programs. The choice of the key parameters of the programs (age of eligibility, benefit amounts and target population) must consider their impact on individual incentives and the fiscal budget. It is also important to consider the interaction between contributory and non-contributory programs, in order to avoid synergies between them.

Check this note in detail here.

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