The Pension System in Argentina
The Pension System in Argentina
This chapter discusses pension reform in Argentina. Argentina instituted a major pension reform in 1994 following an extremely serious macroeconomic crisis. Partly inspired by Chile's experience, it replaced its PAYGO system with a mixed model that incorporated elements of both public and private systems. It is argued that the pension reform was actually a combination of four separate but interdependent reforms: a number of parametric changes, which resulted in stricter requirements for receiving benefits; a shift from a DB formula tying benefits to previous earnings to a DC structure; a re-introduction of a funded scheme; and a set of institutional changes that created both pension fund management firms and public supervisory agencies. Coverage rates as well as indirect economic effects, such as the impact on capital and labour markets are considered, and key policy challenges with respect to coverage, institutional design and efficiency, and system fragmentation are reviewed. While these issues were exacerbated by the 2001-2 financial crisis, it is shown that the pension funds have produced reasonable returns over time.
Keywords: pension reform, pay-as-you-go system, pension funds, financial crisis, mixed model
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