We called the idea a "capitalization scheme.
Chile has been isolated from short-run capital movement because its development is basically rooted in a high savings rate. Cato Policy Report. NOTES 1.
What I am saying is that when you consider privatizing Social Security, you must look at assets as well as liabilities. That's why I believe so much in their freedom to choose.
But a contribution to an individual's pension account is not seen as a tax on the use of labor. Several experts have attributed the doubling of the growth rate to the private pension system.
In 1999, Subsecretary of Finance Alvaro Clarke provoked considerable controversy when he released a study suggesting that retirement funds would be better off under a mattress for the first seven years since only after that length of time do low-income employees begin to earn a profit on their accumulated funds.
If the system had failed in the first years, we would never have been able to try it again. But proposed solutions vary widely. It decided that, instead of financing pensions out of the social security contributions of the working population, it would oblige its citizens to begin to save for their own retirement. The real transition cost of the system is the money the government ceases to obtain from the workers who moved to the new system, because the government is committed to pay the pensions of the people already retired and of those who will retire in the future.
If our filtering system detects that you may have violated our policy, your comment will be placed in a queue for moderation. Their neoliberal experiments were more thorough than elsewhere because the long and ruthless dictatorship ruled out effective opposition. They often work in the lowest paying and most informal jobs, and periodically withdraw from the paid labor force to have and care for children.
La Tercera Santiago , July 31, 2000. Individuals have different preferences: Any meaningful reform of the private social security system is unlikely to occur soon, given the limited political protest over retirement issues in the last decade.
AFPs were supposed to compete by offering the highest returns and lowest fees, but surveys show that people rarely make decisions about which AFP to join based on where costs are lowest or where they will get the highest return. Those who cannot qualify for the minimum retirement pension must rely on family or apply for public assistance, limited in availability and worth about half the minimum retirement income.
The National Association of Public Employees has successfully pushed the government to allow over 24,000 public employees near retirement to return to the more generous public system, and advocates the maintenance of a dual system, public and private, as in Colombia and Argentina.
The day will come when the rules will be much more flexible. The real test of public policies often comes long after they were implemented — in the case of pensions, a working life later. Once your comment is approved, it will then be viewable on the discussion thread. The ultimate lesson is that the only revolutions that are successful are those that trust the individual, and the wonders that individuals can do when they are free.
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And that is without disguised unemployment in the federal government. The Asian tigers are at 30 percent. New workers have to go into the new private system because the old system is bankrupt.