What are you searching?

FIAP > Boletín – Recientes > Progress of the Pension Systems No. 3 – 2022 May-June 2022 / July 2022
11 August, 2022

Progress of the Pension Systems No. 3 – 2022 May-June 2022 / July 2022

In the latest edition of this report, we highlighted the following:

  • Crisis in public PAYGO systems In Argentina, there are currently more retirees and pensioners admitted due moratoriums than full contributions. Hence, the 2021 deficit was 3% of GDP.
  • New pension programs and social security reforms. In Spain, the social security (PAYGO system) set a new upside contribution ceiling. Thus, the maximum contribution has increased by 30% as of 2010. In the Philippines, the House of Representatives passed a bill of law, which, if enacted, will double the social pension and create a mechanism for adjusting pension amounts to inflation. In Qatar, in turn, the Emir ratified a law reforming the PAYGO system, which extends the coverage of private sector workers, increases contribution rates, adjusts covered income, makes the conditions for qualifying for an old-age pension stricter, establishes a minimum old-age pension, and introduces new incentives for working longer.
  • Reforms proposed or to be discussed. In Chile the Criteria survey revealed that only 10% of people would prefer additional contributions to go to a common fund. At the same time, the former Superintendent of Pensions, Alejandro Ferreiro, entered the debate on the pension reform, saying that he saw no reason for excluding the AFPs from new contribution flows. In Costa Rica, according to the Superintendency of Pensions, the advance payout of 30% of the Mandatory Supplementary Pension Scheme (ROPC) is equivalent to ceasing pension contributions for 7 years. Meanwhile, in France, the president announced the implementation of the pension reform of the PAYGO system in 2023 (which includes increasing the retirement age from 62 to 65, among other items).
  • Relevant studies: According to a Chilean Central Bank study, the pension fund withdrawals performed would reduce the future savings rate by 1.7%. The Chilean Association of AFPs, on the other hand, published a document which states that for a PAYGO system to be sustainable in the country to 2050, the contribution rate would have to be quadrupled. In a report, the Spanish Institute of Actuaries also concluded that the reform of the Spanish pension system will further strain the financial sustainability of the PAYGO system.
Suscribe to the Fiap International Newsletter Sign up here