Book contents
- Frontmatter
- Contents
- Acknowledgments
- Social Protection and the Market in Latin America
- PART I RECASTING THE DEBATE OVER PENSION PRIVATIZATION
- 1 Welfare State Transformation: From Social Protection to the Market
- 2 Explaining Structural Pension Reform: Theoretical Debate and Empirical Evidence
- PART II HOW PATH-DEPENDENT INSTITUTIONS CHANGE
- PART III THE TRANSFORMATION OF SOCIAL PROTECTION IN LATIN AMERICA
- PART IV CONCLUSIONS AND IMPLICATIONS
- References
- Index
1 - Welfare State Transformation: From Social Protection to the Market
Published online by Cambridge University Press: 06 July 2010
- Frontmatter
- Contents
- Acknowledgments
- Social Protection and the Market in Latin America
- PART I RECASTING THE DEBATE OVER PENSION PRIVATIZATION
- 1 Welfare State Transformation: From Social Protection to the Market
- 2 Explaining Structural Pension Reform: Theoretical Debate and Empirical Evidence
- PART II HOW PATH-DEPENDENT INSTITUTIONS CHANGE
- PART III THE TRANSFORMATION OF SOCIAL PROTECTION IN LATIN AMERICA
- PART IV CONCLUSIONS AND IMPLICATIONS
- References
- Index
Summary
It is not possible to get the government out of the pension business.
– Nicholas Barr (2002) “The Pensions Puzzle”The “revolution” began quietly and without ceremony on the fourth of November 1980 in the unassuming South American capital of Santiago, Chile. On that day the military dictatorship led by General Augusto Pinochet published Decree Law 3500, abolishing the nation's state-run pension system and replacing it with a private system based on individual retirement accounts. Under the new “privatized” pension system, Chilean workers would no longer contribute to a national social insurance program for retirement, nor were pension benefits defined as a percentage of working income and guaranteed by the state. Instead, workers are required to contribute a fixed share of each paycheck to individual retirement accounts managed by private firms. At retirement, the average wage earner in Chile will lay claim to a pension based on his or her accumulated savings, and the return – be it positive or negative – to those invested funds.
For the architect of this reform, José Piñera, Chile's pension privatization issued the opening salvo in a “world pension revolution.” Indeed, this upheaval has proved to be neither a merely local phenomenon nor inconsequential in its transformative ambitions and implications. Not only did the fires of pension privatization ignite throughout Latin America in the 1990s, but the movement fanned across Europe as well, from Scandinavia to Central Asia. By 2006, pension privatizations of varying degrees had been implemented in twenty-six nations on five continents.
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- Information
- Social Protection and the Market in Latin AmericaThe Transformation of Social Security Institutions, pp. 3 - 20Publisher: Cambridge University PressPrint publication year: 2008