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FIAP > Boletín – Recientes > Progress of the Pension Systems December 2019 – January 2020
17 April, 2020

Progress of the Pension Systems December 2019 – January 2020

  • Crisis in PAYGO systems worldwide. According to a CCSS study, the insolvency issues of the PAYGO pension system (IVM) will begin as of 2021 in Costa Rica. In Ecuador, the PAYGO pension system could stop paying pensions as of 2053, according to an actuarial report that reviewed the country’s social security accounts. In Panama, in turn, the PAYGO system’s reserve could be exhausted by 2023. The director of the social insurance fund explained that there were 5.1 active contributors for each pensioner in the year 2000, and 2.3 contributors per pensioner in 2019, significantly lower than what is necessary to support the system.


  • In France, the government “temporarily” withdrew the reference retirement age of 64, included in the pension reform project, after strong public protests. However, Prime Minister Edouard Philippe said he will “take the necessary statutory measures to strike a balance by 2027.”


  • In Chile, the Chamber of Deputies passed the bill of law that reforms the pension system. The bill will have to be reviewed and approved by the Senate as of March. The reform proposes an additional 6% of contributions, charged to the employer, 3% of which will be allocated to individual accounts, 2.8% to a PAYGO collective solidarity fund and 0.2% to a new dependency insurance.


  • In the Dominican Republic, the President enacted amendments to the social security law, which among other aspects amend the surcharge on delayed payments to the Dominican Social Security System (SDSS), strengthen the Social Security Treasury (TSS) and the Bureau for Information and Defense of Members (DIDA) and amend the commission system implemented by the Pension Fund Managers (AFPs).


  • In Vietnam, Parliament adopted an amendment to the labor code that will gradually increase the retirement age from 60 to 62 for men and from 55 to 60 for women, as of January 2021.


  • The World Bank published a book proposing a package of protection policies applicable to the new world of work. These constitute risk sharing policies. Key messages from the study are: (i) the basis of the risk-sharing policy is the prevention of poverty and subsidized protection against catastrophic loss; (ii) with robust protection available to all, regardless of how it works, government mandates may be less distortive; (iii) Instead of protecting workers from change, governments can prepare them for change, supporting transition and re-employment.


To download this Pensions Progress Report, please click on this link.

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