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Chile’s Private Pension Plan

Chile’s Private Pension Plan. Who benefits?. By: Nitish Rajbhandary, Catie Whelan, Kevin Slattery. Introduction. Thesis Statement History of Pension System in Chile Benefits of the System Problems with the System Recommended Reforms Conclusion. Thesis.

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Chile’s Private Pension Plan

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  1. Chile’s Private Pension Plan Who benefits? By: Nitish Rajbhandary, Catie Whelan, Kevin Slattery

  2. Introduction • Thesis Statement • History of Pension System in Chile • Benefits of the System • Problems with the System • Recommended Reforms • Conclusion

  3. Thesis Chile’s private pension system functions well when workers contribute on a regular basis. However, the pensions plan fails vulnerable groups such as women, unemployed, and self employed workers.

  4. History • Pay-as-you-go-system • Privatized under Pinochet in 1981 • Why was it privatized? • Fiscal pressure • Redistributive features • How system functions

  5. Types of Social Security

  6. Benefits • Reduce Government Obligations • Encourages Savings • Possible Economic Growth • Employer may pay • High Rates of Return

  7. Returns

  8. Returns

  9. Problems • Difficult to Diversify Holdings • Competition • AFP Commission Cost • Coverage

  10. Coverage

  11. Coverage

  12. Coverage

  13. Reforms • Labor Law Reforms • Increase Holding Diversification • Minimum Pension Guarantee • Gender Reforms • Default coverage for self-employed

  14. Conclusion Chile’s pension system provides better coverage than Social Security in the United States, however it still needs some reforms in order to cover everyone. Women, unemployed and self-employed are the most at risk of not receiving an adequate pension after retirement.

  15. Works Cited • And Now, a Word From Chile. (2006, December 31). The New York Times, p. 7. • Attwood, J (2007, May 11). Cash heavy, Chile funds shift abroad. The International Herald Tribune, p. 14. • Bachelet’s citizens democracy. (2006, March 11). Economist, Retrieved May 22, 2007, from Academic Search Premier database. • Berstein, S., Larrain, G., & Pino, F. (2006). Chilean pension reform: Coverage facts and policy alternatives. Economia: Journal of the Latin American and Caribbean Economic Association, 6(2), 227-274. Retrieved May 28, 2007, from EconLit database. • Berstein, Solange, and Andrea Tokman. 2006. “Mejores pensiones par alas mujeres: una evaluación de políticas.” En Foco 64. Santiago: Expansiva. • Chile: has social security privatization fostered economic development? (2001). Retrieved 5/18/2007, from http://www.blackwell-synergy.com/doi/pdf/10.1111/1468-2397.t01-1-00186 • Chilean government. (2007). Retrieved 5/11, 2007, from http://www.chileangovernment.gov.cl/index.php?option=com_frontpage&Itemid=1 • From Chicago to Santiago: Neoliberalism and Social Security Privatization in Chile. (2005). Retrieved 5/19/2007, from http://www.blackwell-synergy.com/doi/pdf/10.1111/j.1468-0491.2005.00296.x • Horror movies? Not really. (2005, February 12). Economist, Retrieved May 22, 2007, from Academic Search Premier database. • NATIONAL CENTER FOR POLICY ANALYSIS. (2007). Pension reform in Chile: Closing the gap, not scrapping the system. Retrieved May/24, 2007, from http://www.ncpa.org/pub/ba/ba583/ • Pondering pensions. (2005, November 12). Economist, Retrieved May 22, 2007, from Academic Search Premier database. Thomson, E (2007, May). AFPs push to buy more. Latin Finance, p. 28. • Social security privatization: the lessons from the Chilean experience for other Latin America countries and the USA. (2003). Retrieved 5/18/2007, from http://www.blackwell-synergy.com/doi/full/10.1111/1468-2397.00247?prevSearch=allfield%3A%28chile+social+security%29

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