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FIAP > Boletín – Recientes > Pensions Note No. 36 – Proposed guidelines for second generation reforms of the pension systems – July 2019

Pensions Note No. 36 – Proposed guidelines for second generation reforms of the pension systems – July 2019

17 July, 2019

The primary purpose of any pension system should be the prevention of poverty in old age. Consequently, any proposed reform must start with this objective in mind, so as not to lose sight of the horizon or get embroiled in discussions of an ideological nature that divert attention from the truly important issue, namely the welfare of pensioners.

Since several Latin American countries are currently discussing reforms to their pension systems (e.g., Chile, Brazil and Colombia), FIAP invited experts from several international agencies to its 17th International Seminar, for them to explain their standpoint regarding the core guidelines for reforming such systems.

The experts were emphatic that every reform must contain several crucial elements. First of all, grant protection in old age to the neediest via a non-contributory solidarity pillar, financed through general taxes. Second, strengthen the contributory pillar, guaranteeing greater savings for a longer period of time (i.e., increasing contribution rates and extending the retirement age). It is also essential to improve the coverage of the existing pension systems, taking measures to reduce the high levels of labor informality in the region, as well as the incorporation of independent or self-employed workers. Third, encourage voluntary savings through appropriate incentives.

To review the Note, please download it at this link.

 

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