{
  "title": "Assessing Chile's Pension System: Challenges and Reform Options",
  "publication": "IMF Working Papers, September 10, 2021",
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  "summary": "Chile’s pension system came under close scrutiny in recent years. This paper takes stock of the adequacy of the system and highlights its challenges. Chile’s defined contribution system was quite influential when introduced, and was taken as an example by other countries.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Chile’s defined contribution pension system was influential when introduced but is now delivering low replacement rates relative to OECD peers.\n- Key drivers of underperformance: parameters that did not adapt over time to changing demographics and global returns, and persistent informality in the labor market.\n- Recent legislation allowing pension savings withdrawals to counter the effects from the COVID-19 pandemic is projected to further reduce replacement rates and increase fiscal costs.\n- A substantial improvement in replacement rates is feasible via a reform that raises contribution rates and the retirement age, coupled with policies that increase workers’ contribution density."
    },
    {
      "heading": "Key findings",
      "content": "- The system is delivering low replacement rates relative to OECD peers.\n- Demographic trends and low global interest rates will continue to reduce replacement rates in the absence of reforms.\n- Informality in the labor market undermines contribution density and pension adequacy.\n- Pension savings withdrawals enacted in response to COVID-19 are projected to:\n  - further reduce replacement rates, and\n  - increase fiscal costs."
    },
    {
      "heading": "Projections and fiscal implications",
      "content": "- Without reform, the system’s inability to deliver adequate outcomes for a large share of participants will continue to magnify due to demographic trends and low global interest rates.\n- Recent pension withdrawals are explicitly projected to reduce replacement rates and increase fiscal costs (no numeric fiscal aggregates provided on the page)."
    },
    {
      "heading": "Reform options and policy recommendations",
      "content": "- Combine measures to raise contribution rates with an increase in the retirement age.\n- Implement policies aimed at increasing workers’ contribution density (reducing informality and improving continuous contributions).\n- Such a combined reform package is characterized as capable of producing a substantial improvement in replacement rates."
    },
    {
      "heading": "Subjects and keywords (as listed on the page)",
      "content": "- Subjects: Aging, Expenditure, Gender, Labor, Pension spending, Pensions, Population and demographics, Retirement, Women\n- Keywords: Aging, contribution rate, fiscal cost, Global, Pension spending, Pensions, reform option, replacement rate, Retirement, savings withdrawal, Women\n\nSamuel Pienknagura and Christopher Evans, \"Assessing Chile's Pension System: Challenges and Reform Options\", September 10, 2021, IMF Working Papers No. 2021/232.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2021/09/09/assessing-chile-s-pension-system-challenges-and-reform-options-465415"
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    "Authors: Samuel Pienknagura, Christopher Evans",
    "Published: September 10, 2021",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781513596112.001",
    "Chile’s defined contribution pension system was influential when introduced but is now delivering low replacement rates relative to OECD peers.",
    "Key drivers of underperformance: parameters that did not adapt over time to changing demographics and global returns, and persistent informality in the labor market.",
    "Recent legislation allowing pension savings withdrawals to counter the effects from the COVID-19 pandemic is projected to further reduce replacement rates and increase fiscal costs.",
    "A substantial improvement in replacement rates is feasible via a reform that raises contribution rates and the retirement age, coupled with policies that increase workers’ contribution density.",
    "The system is delivering low replacement rates relative to OECD peers.",
    "Demographic trends and low global interest rates will continue to reduce replacement rates in the absence of reforms.",
    "Informality in the labor market undermines contribution density and pension adequacy.",
    "Pension savings withdrawals enacted in response to COVID-19 are projected to:",
    "Without reform, the system’s inability to deliver adequate outcomes for a large share of participants will continue to magnify due to demographic trends and low global interest rates.",
    "Recent pension withdrawals are explicitly projected to reduce replacement rates and increase fiscal costs (no numeric fiscal aggregates provided on the page).",
    "Combine measures to raise contribution rates with an increase in the retirement age.",
    "Implement policies aimed at increasing workers’ contribution density (reducing informality and improving continuous contributions).",
    "Such a combined reform package is characterized as capable of producing a substantial improvement in replacement rates.",
    "Subjects: Aging, Expenditure, Gender, Labor, Pension spending, Pensions, Population and demographics, Retirement, Women",
    "Keywords: Aging, contribution rate, fiscal cost, Global, Pension spending, Pensions, reform option, replacement rate, Retirement, savings withdrawal, Women",
    "**Working Paper**"
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