Early Retirement

Brief Analysis #583 - Pension Reform in Chile: Closing the Gap, Not Scrapping the System

A quarter-century ago, Chile replaced its traditional social security system with personal retirement accounts funded by workers and invested in stocks and bonds.  Chile's president recently proposed several modifications to its pension system, including a new retirement benefit funded by general government revenues.  Long-time critics of Chile's pension system have been quick to claim the proposed reforms are proof of the system's failure.  Unfortunately, the critics fail to distinguish between a system that functions well for contributors versus one that is designed to give benefits to noncontributors.