Social Security at The Crossroads: Toward Effective Pension Reform in Latin America

Individual pension savings accounts in Latin America promised to improve compliance and raise benefits in a cost‐effective manner, while at the same time raising savings rates, which would in turn promote economic growth. A review of the evolution of pension reform in Latin America shows results to have been mixed. Analyses of the recent reforms generally fail to consider the extent to which the success or failure of pension systems is driven by exogenous factors, including macroeconomic and labour market conditions, and institutions. A number of recent studies have issued a reassessment of the region's reforms that stresses the importance of a basic guaranteed pension benefit and recognizes that a range of alternatives are viable in the region. Pension systems based on individual accounts are undergoing a thorough reevaluation.