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FIAP > Boletín – Recientes > Progress of the Pension Systems No. 5 – September 2022 / October 2022
24 November, 2022

Progress of the Pension Systems No. 5 – September 2022 / October 2022

Relevant studies:

  • United Kingdom: Studies show the challenges and progress of the automatic enrollment pension system. One of them shows that 5 out of 10 employers liked the idea of an automatic scaling approach to the contribution rate. The other shows that, despite the financial turbulence, the voluntary system opt-out rate remained low (at 8%) in the last year.
  • European Union (EU): A report compiling the returns of private pension savings in Europe was published (17 EU countries, with a second occupational pillar and a third voluntary savings pillar).
  • Chile: Observatorio Perspectivas published a report explaining that it is not a good idea for Chile to imitate the Swedish pension model, because it has already paid for the costly transition from its PAYGO systems, and this model is unsustainable in the face of population aging.

Crisis in public PAYGO and/or government managed systems. In Germany, the Chairman of the Confederation of German Employers’ Associations pointed out the urgent need to reform the public PAYGO system, in the light of population aging, suggesting that the retirement age should be linked to life expectancy. In Argentina, the PAYGO pension system once again ranked second last in the Mercer and CFA Institute’s Global Pension Index, largely explained by its lack of sustainability. In Bolivia, the Public Pension Manager is generating a great deal of distrust in the population, because the manager, regulator and main debtor of workers’ contributions is the State itself. In the US, according to Transamerica’s 22nd Annual Retirement Survey, 71% of workers are worried as to whether social security (PAYGO system) will be able to help them retire. In Spain, the latest data published by Social Security confirm that inflation has been eating away at the purchasing power of pensions in October, since pensions rose 5.4% in the last 12 months, while annual inflation in the same period is now 8.9%. In Ireland, the cabinet approved a reform package on September 20 (which is still pending parliamentary approval and would come into effect in 2024) to improve the long-term sustainability of the public PAYGO system, which, among other measures, gradually increases contribution rates, with actuarial review every 5 years, and introduces incentives to raise the retirement age. In Panama, the Social Security Fund (SSC) will ask the ILO for suggestions to address the crisis of the PAYGO pension system.

Mexico: Congress approved a reform to make social security for domestic workers mandatory, so they will now be able to save for a pension and access disability and daycare benefits, among others.

Switzerland: In a referendum on September 25, it was approved that the PAYGO system, among other measures, should gradually raise the retirement age for women from 64 to 65, to equal that of men.

To review the entire study, click here.


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