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July 2009, Number 9-14
IS LATIN AMERICA RETREATING FROM
INDIVIDUAL RETIREMENT ACCOUNTS?
* Fabio Bertranou is senior social security specialist with the International Labour Organization. Esteban Calvo is a doctoral
candidate in Sociology at Boston College and a graduate research assistant at the Center for Retirement Research at Boston
College (CRR). Evelina Bertranou is a senior economist with the Matrix Knowledge Group. The authors would like to
thank Ignacio Alvarez, Barbara E. Kritzer, James Schulz, John B. Williamson, and CRR colleagues for their comments and
other forms of help in connection to this brief. However, the authors should be held responsible for any remaining errors
or inaccuracies.
Introduction
In 1981, Chile initiated old-age pension reforms
that introduced mandatory funded individual retire-
ment accounts (IRAs) and moved away from public
systems. Beginning in the 1990s, ten other Latin
American countries followed in Chile’s wake. In
recent years, even before the onset of the financial
crisis, a second round of pension reforms was initi-
ated to strengthen the public component and address
the problems created by individual accounts. The
most extreme case of retrenching is Argentina, where
IRAs were eliminated for mandatory contributions in
late 2008. This country has gone back to a traditional
defined-benefit pay-as-you-go scheme. This brief
reviews the two rounds of pension reforms to deter-
mine whether Latin American countries are moving
away from individual pensions.1 Even though this
region is quite heterogeneous, its labor markets and
social security systems share some common features,
such as a large informal economy and a variety of
uncoordinated institutions providing old-age income
protection. The 2008-2009 financial crisis and eco-
nomic recession is posing new challenges to systems
that have introduced IRAs.
First Round of Reforms:
Enacting IRAs
Beginning in the 1990s, the fear of large fiscal
imbalances and mismanaged pay-as-you-go (PAYG)
pension schemes prompted ten Latin American
countries to follow Chile in enacting IRAs (see Figure
1 on the next page).2 Although the reforms improved
long-term system sustainability, problems such as low
coverage, a shrinking social safety net, and imperfect
regulatory frameworks, remained.
By Fabio Bertranou, Esteban Calvo, and Evelina Bertranou*
Many other factors – including the type of ben-
efits offered, funding mechanisms, administrative
arrangements, and incentives – explain the varia-
tions in coverage.4 For example, the 1994 reform in
Argentina raised retirement ages and vesting periods,
creating stricter conditions to access benefits and thus
reducing coverage for the population aged 65 and
over from 78 percent in 1992 to about 65 percent in
the mid-2000s. In addition, unemployment, infor-
mal labor markets, and cultural factors are strong
determinants of compliance and coverage rates.
Besides their failure to expand coverage, IRAs also
removed some “solidarity” (or redistributive) mecha-
nisms of PAYG schemes.5 Although with important
limitations, PAYG schemes involve not only inter-
generational redistribution (contributions from active
workers are used to pay benefits for retirees) but also
redistribution between income groups. In contrast,
IRAs are based on personal savings and leave the
responsibility of income redistribution to social assis-
tance and minimum pensions provided by state-run
programs. As contributory coverage declined or re-
mained stagnant, social safety net and non-contribu-
tory programs have grown in number of beneficiaries
in several countries, such as Chile and Colombia.
A third challenging area of IRA reforms relates
to imperfect regulations, such as protection from
political interference.6 Although a driving reason for
reform was the intention to create pension systems
highly insulated from political intervention, the
evidence suggests that the reformed systems remain
vulnerable to political manipulation. For example,
loose regulation led to ambiguous approaches to
transition rules in Bolivia and in the early 2000s al-
lowed the government of Argentina to defer its debt
by “selling” bonds to fund management companies
until a default occurred. Because of low coverage
rates and decreased solidarity, governments continue
financing a substantial part of the pension bill and
public institutions continue to manage pension ben-
efits, including defined benefit, minimum guaran-
teed benefits, and social assistance pensions. Public
institutions also work as guarantors of the private IRA
scheme. In sum, although IRAs play an important
role in reformed pension systems in Latin America,
their enactment did not result in a full withdrawal of
governments from pension systems.7
Center for Retirement Research
2
Figure 1. Introduction of Individual Retirement
Accounts (IRAs) in Latin America, Relationship
of IRAs to Existing System
* Replaced PAYG system in 1981.
** Re-nationalized in 2008.
Sources: Authors’ elaboration based on Meso-Lago (2004a);
Gill, Packard, and Yermo (2005); and U.S. Social Security
Administration (2003-2008) and (2008b).
IRAs were intended to create a stronger link
between benefits and contributions to get workers to
view their contributions as personal savings rather
than as a tax. This mindset would in turn encourage
workers to contribute and would increase coverage
and compliance rates. However, the evidence from
Latin America suggests that introducing IRAs did not
improve coverage and compliance rates.3 Figure 2 on
the next page shows that coverage rates, measured as
the ratio of contributors to workers, actually declined
after the reforms. This result clearly illustrates that
structural features of labor markets are more relevant
than pension system design in driving coverage.
Mexico
(1997)
Dominican Republic
(2003)
Peru
(1993)
Argentina
(1994)**
Chile
(2008)*
Colombia (1994)
Costa Rica (2001)
El Salvador (1998)
Uruguay
(1996)
Bolivia
(1997)
Supplement
Alternative
Replacement
Panama (2008)
Issue in Brief 3
Second Round of Reforms:
Retrenching and Improving
IRAs
During the last few years, Latin America started a
second round of pension reforms in response to the
shortcomings of IRAs. The new political context is
characterized by governments being less enthusiastic
about privatization. The reforms are resulting in a
significant comeback of public components in old-age
income support systems in an attempt to reach a
better balance of social risks with individual savings.
The case that best illustrates this trend is Chile, where
a comprehensive pension bill was approved in 2008.8
The 2008-2009 financial turmoil will probably rein-
force the changes of the second round of reforms in
Latin America. The most extreme case is Argentina,
which “re-nationalized” IRAs, partially in response to
the financial crisis.
Retrenchment of IRAs and Expansion of
Public Pensions
Public institutions have maintained an important
role even after privatization. In the second round of
reforms, the direct involvement of public institutions
in pension provision has been reinforced in three
ways: 1) allowing workers to switch back to the PAYG
scheme; 2) incorporating solidarity and income re-
distribution mechanisms; and 3) creating new public
pension reserve funds.
Choice between IRAs and PAYG. The first round of
reforms generally established that new workers were
to join the IRAs, with no option to switch back to the
PAYG scheme.9 Perhaps one of the more radical
transformations of the second round of pension re-
forms has been allowing some workers to switch back
to the PAYG scheme. For example, in 2007 Peru per-
mitted workers enrolled in IRAs to rejoin the PAYG
scheme if they had contributed to the PAYG scheme
before 1996 and met conditions to retire under that
scheme. This law aimed to increase pensions for
eligible workers who would have otherwise received
a smaller pension in the IRA scheme. In 2008,
Uruguay also enacted regulations that allowed some
affiliates to leave IRAs and switch back to the defined
benefit scheme. Argentina had taken the reforms one
step further before the “re-nationalization” in 2008.
During 2007, the government changed the default
affiliation to the PAYG scheme for workers entering
the formal labor market and – for a six-month win-
dow – allowed individuals already in the IRA scheme
to switch back to the PAYG scheme. Notably, of
those eligible to switch, 80 percent stayed in the IRA
scheme, showing that inertia is a natural outcome
when choice is introduced in pension systems. In
Figure 2. Coverage Rates in Latin America Before and After First Round of Old-Age Pension Reforms
Notes: Coverage is measured as contributors/economically active population at two points in time: 1) the year before the
reform; and 2) in 2002 for all countries except the Dominican Republic (which uses 2004 data).
Sources: Adapted from Mesa-Lago (2005); Rofman and Luccetti (2006); and AIOS (2004).
48
13
29
58
26
11
63
21
36
30
63
55
56
12
32
24
26
23
58
29
0
10
20
30
40
50
60
70
Before After
Argentina
El Salvador
Dominican
Republic
Costa Rica
Colombia
Chile
Bolivia
Uruguay
Peru
Mexico
addition, workers within 10 years of retirement and
with low IRA balances were automatically transferred
to the PAYG scheme.10 Furthermore, the benefit
paid by the PAYG scheme for each year of contribu-
tion increased from 0.85 percent to 1.5 percent of
pre-retirement wages.11 This change considerably
raised the rate of return on contributions made to the
public defined benefit scheme. Later on, Argentina
decided to re-nationalize its IRA scheme in 2008.12
The government justified this aggressive move as a
reaction to the financial market crisis, though reduc-
ing its budget constraints was clearly a substantial
motivation. The approved bill stated that, by January
of 2009, IRA funds were to be absorbed by the public
PAYG scheme.
Solidarity and income redistribution. The first
round of pension reforms partially removed impor-
tant solidarity and redistribution mechanisms. In
response, several countries introduced cash transfer
programs and expanded their non-contributory pen-
sions, financed by general tax revenue, to supplement
contributory pensions and protect old-age people
against poverty.13 For
example, El Salvador cre-
ated a subsidy for retirees
receiving IRA benefits
that are lower than they
would have been under
the old PAYG scheme. In early 2008, Chile approved
a pension reform bill aiming to provide universal and
more equitable benefits. The new system of “solidar-
ity pensions” gradually replaces the means-tested
pensions and the guaranteed minimum pensions
with two types of benefits: a non-contributory pen-
sion and a supplementary pension (top-up) benefit
for those who have contributed to the private sys-
tem. The supplementary monthly benefit starts at
the level of the non-contributory solidarity pension
and ends at about US $400. It also provides a tax
credit of 15 percent for voluntary savings, which is
targeted to low-income workers. Another interesting
case is Colombia; in 2003 it introduced a solidarity
pension fund, which pays non-contributory benefits
and matches contributions for low-income work-
ers. Although solidarity and income redistribution
mechanisms have been enhanced elsewhere in the
region, poverty reduction and gender equality are still
considered missing or incomplete pieces of pension
reform in Latin America.14
Reserve funds for public pensions. Latin American
countries have also passed legislation creating sepa-
rate reserve funds to provide greater financial stability
and reduce the burden on general revenues of fund-
ing the government’s pension obligations.15 Chile has
instituted two separate reserve funds (the Pension
Reserve Fund and the Economic and Social Stabiliza-
tion Fund) in response to the large budget surpluses
attributed to the country’s record copper sales during
recent years. Both funds are not managed directly by
the government, but by the Central Bank (65 percent
of the funds) and third parties (35 percent of the
funds). In Argentina, a state-owned bank supervised
by multiple-institutions manages a Sustainability
Fund, and a committee including members from dif-
ferent agencies oversees investment decisions.
Improvement of IRAs
Governments and private administrators have clearly
acknowledged the shortcomings of IRAs and the need
for intervention. However, this recognition does not
necessarily imply the termination of IRAs, as hap-
pened in Argentina. The second round of pension
reform in Latin America is also about revising IRAs
and correcting their
flaws. Three examples
of reforms aiming to
improve IRAs are: (1)
extending mandatory
contributions to work-
ers not currently covered; (2) lowering costs to ac-
count holders; and (3) changing the investment rules
for pension assets.
Extend coverage. The first round of pension
reforms typically made IRAs voluntary for self-em-
ployed workers. The second round extends manda-
tory participation to these workers.16 For example,
following Costa Rica and Colombia, Chile will start
requiring the self-employed to gradually join the IRA
scheme within the next seven years. Mexico has en-
acted similar measures for the self-employed and has
extended IRAs to federal public employees. Other
countries, such as Peru, are also discussing compul-
sory savings for all categories of workers.
Lower IRA costs. High administrative fees and
premiums for survivors and disability insurance have
lowered net rates of return for account holders and
produced very large profits for many fund manage-
ment and insurance companies. The problem has
been aggravated by participants’ lack of awareness of
the importance of fees.17 To lower costs for account
holders, countries have implemented a number
of measures.18 For example, in 2008 Mexico cre-
Center for Retirement Research
4
Recent reforms aim to correct the flaws of
IRAs and strengthen safety nets.
Issue in Brief 5
ated an indicator to help account holders compare
the net rate of return of pension fund management
companies. New entrants to the labor force who do
not choose a management company are assigned
by default to the one with the highest rate of return.
Transfers between companies are allowed once a year,
but transfers to the company with the highest rate of
return are now permitted without restrictions. In ad-
dition, companies are now allowed to charge a fee on
account balances, but not on monthly contributions.
Countries such as El Salvador, Chile, and Peru took a
similar path. Even though these policies are expected
to have a positive effect, it is difficult to predict their
magnitude. Some of the instruments to induce lower
costs rely on past performance; therefore, their actual
effectiveness is uncertain.
Investment rules for pension assets. Portfolios have
been heavily concentrated in government bonds, but
new types of instruments and multi-fund strategies
have been authorized during the second round of
reforms. Numerous countries have implemented
such changes, including Chile, Colombia, Mexico,
and Peru.19 Another way to cope with risks has been
the implementation of multi-funds, where insured
workers can choose among several risk-related port-
folios. It is not clear that multi-funds actually con-
tribute to financial literacy and adequate returns for
the average insured worker. Furthermore, the recent
financial market turmoil resulted in serious declines
in IRA assets, suggesting that they were too exposed
to market risks. Numerous reasonable concerns have
been raised over whether letting workers choose port-
folios with high exposure to risks are a proper “social
security” policy.
Conclusion
This brief addressed whether IRAs are retrenching in
Latin America. Although the idea is provocative, we
conclude that the concept of “retrenchment” alone is
insufficient to characterize the new politics and politi-
cal economy of old-age pension reform. As opposed
to what happened in the 1980s and 1990s, pension
reforms in Latin America in recent years have com-
bined retrenchment with improvement of IRAs.
During the period of enactment, ten Latin Ameri-
can countries introduced mandatory funded IRAs as
a full or partial replacement for the old PAYG public
schemes. One remarkable aspect about this first
round of pension reforms is that, even though it in-
troduced substantial changes in funding and manage-
ment, in most countries public institutions assumed
a crucial role not only as regulating agents, but also in
managing and financing minimum guaranteed and
social assistance pension benefits.
The second round of pension reforms, which
began after 2005, has reinforced the involvement of
public institutions in the pension system. In addi-
tion, numerous countries have introduced measures
to improve IRAs. The driving force of the second
round of reforms has been to increase coverage,
equity, and efficiency of the overall system. With the
exception of Argentina, which has re-nationalized its
pension system, the second round of reforms seems
to be less radical compared to the path-breaking
changes introduced by the first round.
The dominant policy prescriptions in vogue dur-
ing the first round of reforms in Latin America have
clearly been re-evaluated. As countries started to
engage in a second round of reforms, the World Bank
– and other international organizations that promoted
IRA pension reforms – has acknowledged that more
attention should be paid to mechanisms to reduce
poverty in old-age, to expand coverage and equity,
and to protect participants from market risks. Non-
contributory and universal pensions are recognized as
playing a greater role. The challenges faced by coun-
tries that introduced IRAs, the changes in interna-
tional financing institutions, and the recent financial
crisis may have tempered the enthusiasm of other
countries from applying the same type of reforms.
Policymakers around the globe could benefit from
looking closely at these changes in pension policy.
APPENDIX
Issue in Brief 7
This appendix provides details on pension structure
and reforms in Latin America.20
Argentina
This is the only country case of full IRA retrench-
ment. IRAs were introduced in 1994; reformed in
2007 to allow the choice of switching back to the
defined benefit PAYG scheme; and, finally, eliminated
for mandatory contributions in 2008. The current
system is, therefore, fully defined benefit PAYG.
Enactment of IRAs
The reform implemented in 1994 created a mixed
system comprising both public and private compo-
nents. The reformed system covered both employed
and self-employed workers with a three-tier structure:
1) a non-earnings-related, universal public pension
proportional to years of service; 2) an earnings-related
public pension for contributions that preceded the
reform; and 3) a choice between a public defined con-
tribution plan and a private IRA based on earnings af-
ter the reform. IRAs were the default choice, with no
option to switch back to the public system. Separate
schemes still operate for the following groups: armed
forces, security forces, and the police force; civil ser-
vants of some provinces and municipalities; and other
groups, including teachers and judicial authorities.
The public component was run by the state and
financed with general revenue and contributions by
employees and employers. The private component
was run by private fund managers and fully funded
through employee contributions. For those workers
in the fully-funded plan, employers’ contributions
continue financing benefits administered by the
public component. Apart from these contributions,
pension benefits were funded by the government
through general revenue and earmarked taxes for so-
cial security. The government also contributed to the
disability and survivor pensions of insured persons in
transition21 who opted for the funded scheme.
To receive pension benefits, individuals must have
contributed to the system for a period of at least 30
years (increased from 20 years for women and 25
years for men) and satisfy the age requirement (raised
by five years, to 60 for women and 65 for men). Indi-
viduals aged 70 and above with 10 years of contribu-
tions receive an advanced age pension.
The Superintendence of Retirement and Pension
Fund Administrators were in charge of overseeing
the pension fund administrators and the IRA scheme
more generally. The National Social Security Admin-
istration (ANSES) administers the PAYG scheme.
Retrenchment and Improvement of IRAs
In 2007 the government introduced a number of
reforms:
Under the new regulations, the insured were al-1)
lowed to switch between the PAYG and the IRA
scheme every five years. After the reform, indi-
viduals already in the funded scheme had a six-
month period to switch back to the PAYG scheme.
For new entrants, unless they choose an option
within 90 days, the default was the PAYG scheme.
Individuals close to retirement (i.e., up to 10 years 2)
before) with low balances in their individual ac-
counts (i.e., balances that at the time they retire
would not equal the current minimum pension
paid by the State under the PAYG scheme) were
automatically transferred to the PAYG scheme.
With the aim to increase coverage, conditions to 3)
be entitled to pension benefits were made more
flexible. For a defined period of time, all individu-
als at their retirement age who had not complied
with the requirement of 30 years of contributions
could access a reduced pension benefit.
During Argentina’s economic downturn in late 4)
2001, the government increased workers’ take-
home pay by lowering their pension contribution
rates from 11 percent to 5 percent for both the
PAYG and the IRA scheme. By early 2002, the
government raised contributions to 11 percent of
earnings for workers in the public scheme and
raised the individual account rate to 7 percent for
those in IRAs. In 2008, pension employees’ con-
tribution rates were equalized for both schemes at
11 percent of earnings.
In order to provide guarantees to the PAYG 5)
scheme, a ‘sustainability’ fund was created. The
fund began with US$6.45 billion in assets from
the ANSES and is financed with any annual
ANSES surplus. The fund may be used only to
pay for public pension benefits.
Prior to the 2007 reforms, pension fund man-6)
agers were free to define their fees, always as a
percentage of contributions (although measured
as a percentage of salaries). Fees were used to
cover administrative expenses and disability and
survivors insurance costs. Administrative fees
had changed over time; prior to the reform, they
were at around 2.5 percent of wages on average (of
which 1.1 percent was for administrative costs and
1.4 percent for insurance). In 2007 the govern-
ment established a maximum fee level of one
percent of wages.
Prior to the 2007 reforms, pension fund manag-7)
ers were required to buy an insurance policy to
cover the cost of an annuity (net of accumulated
funds in the individual account) in case the worker
died or became disabled. Coverage was not uni-
versal, as it only included those who had contrib-
uted on a regular basis. In 2007 the government
eliminated the insurance scheme for disability and
survivors benefits in the funded scheme. It was
replaced by a pooling mechanism including all
pension funds.
Pension fund managers select their portfolio 8)
structure from a wide set of possibilities. The
1994 Law established maximum concentration
limits by type of instrument and issuer. Following
the 2007 reforms, the list of authorized invest-
ments included a new ‘type’ of instrument: “debt
instruments, shares or other instruments that
finance medium to long-term productive or infra-
structure projects.” Pension funds had to invest
at least 5 percent, and up to 20 percent, of their
assets in this new type of instrument to promote
local economic activity.
In 2008, Argentina took the reforms one step
further and Congress passed new legislation “re-
nationalizing” the pension system. This meant the
termination of IRAs for mandatory contributions and
fully converting the system to PAYG defined benefit.
The ANSES took over the assets held by private pen-
sion funds and the pension benefits paid by them.
Insurance companies continued paying the annuities
contracted before the 2008 reform.
Bolivia
Enactment of IRAs
The structural reform that introduced IRAs in Bolivia
was implemented in 1997. The defined benefit PAYG
scheme was completely closed and contributions to
the old system switched to the new one. While par-
ticipation of new workers in IRAs is mandatory, the
self-employed can join the system voluntarily. There
is no separate system for civil servants.
IRA benefits are fully funded with workers’ contri-
butions. The government contributes as an employer,
pays a recognition bond for contributions to the old
system and finances pensions payable under the old
system. Employers other than the government make
no contribution.
The retirement age was increased and set at 65 for
men and women, or at any age if the accumulated
capital in the individual account, plus accrued inter-
est, is sufficient to finance a monthly pension equal to
70 percent of the insured’s average covered earnings
in the last 5 years. For payout, only annuities are al-
lowed.
The system is supervised by the Superintendence
of Pensions, Securities, and Insurance, which defines
investment rules for pension fund administrators.
Retrenchment and Improvement of IRAs
A small universal non-contributory pension benefit
(Bonosol) was implemented in 2002. This benefit
is financed from the privatization of state-owned en-
terprises and is paid to resident citizens born before
January 1974 who reach the retirement age. Every
five years, the benefit amounts are recalculated by the
Superintendence of Pensions, Securities, and Insur-
ance.
The Bonosol program was modified in 2008 and
replaced by Renta Dignidad. The program is still
universal; however, benefits are higher for those
who are not getting a contributory benefit. Besides
financing a solidarity fund to supplement pensions
for low earners, a pension reform bill sent to Parlia-
ment in July 2008 proposes additional modifications:
Center for Retirement Research
8
lowering the full-retirement age to 60, creating a
government agency to replace the two existing private
pension fund companies, mandating employer con-
tributions, and allowing retirement at any age if IRAs
yield a pension of 60 percent or more of the worker’s
average salary in the previous five years.
Chile
Enactment of IRAs
In 1981, Chile was the first country to introduce an
IRA scheme and phase out its PAYG scheme. While
participation in IRAs is mandatory for new salaried
employees, affiliation for self-employed workers
was voluntary. There is no separate system for civil
servants. Only the armed and security forces have a
separate defined benefit program.
Total payroll taxes were reduced substantially by
eliminating employers’ contributions. Employees’
contributions for pensions were set at 10 percent of
wages plus about 2.4 percent for administration fees
and insurance premiums. Employers only make
contributions for employees working under arduous
conditions. The government covers guaranteed mini-
mum pensions, social assistance pensions, and offers
subsidies as needed to finance the program.
The retirement age was set at 60 for women and
65 for men, allowing early retirement for those work-
ers with balances sufficient to finance an annuity
higher than 50 percent of their pre-retirement wages
or higher than 50 percent of the minimum pension.
Payout options are annuity, scheduled withdrawal,
and combinations of the two. The government
guarantees a minimum pension of 61 percent of the
minimum wage in 1982 to workers who contributed
for at least 20 years but who have insufficient funds
to yield the minimum pension, and to retirees who
have chosen scheduled withdrawal but lived beyond
their expected retirement age and exhausted their
funds. The value of the minimum pension has been
adjusted according to the Consumer Price Index.
The IRA scheme has been supervised by the
Superintendence of Pension Fund Management
Companies (SAFP), which was reformulated as the
Superintendence of Pensions (SUPEN) under the
2008 reform.
Retrenchment and Improvement of IRAs
In 2002, a multi-fund format was adopted. Men
under 55 and women under 50 can choose between
five types of funds offering varying degrees of risk (A,
B, C, D and E), whereas men and women older than
these ages can only choose between the four funds
of relatively minor risk, and pensioners between the
three funds of lesser relative risk. The balances from
mandatory contributions can be distributed between
two different funds within one pension fund manage-
ment company. Investment rules have been modified
to allow more foreign assets in pension fund portfo-
lios. For payouts, a combination of options (annuity
and scheduled withdrawal) is also allowed.
In 2007, rules for early retirement were changed,
making them stricter to discourage early withdrawal
from the labor force with relatively low benefits. The
new rules establish that the accumulated funds must
be sufficient to finance an annuity higher than 58
percent of their pre-retirement wages or higher than
150 percent of the minimum pension.
In 2008, Chile introduced significant changes to
the pension system as a whole. The minimum pen-
sion guarantee program was merged with the social
assistance benefit program, creating a public institu-
tion that manages two types of benefits: a minimum
non-contributory benefit that is paid to the poorest
60 percent of the elderly and a supplementary benefit
for those workers with low IRA balances. Payroll
contributions were not increased; however, the pay-
ment of the insurance premium for disability and
survivorship will switch from employees to employers
in July 2009. This insurance coverage now reaches
male widowers. The self-employed will be gradually
required to join the IRA scheme. Voluntary occu-
pational schemes have been also introduced on top
of mandated IRAs and individual voluntary pension
savings. In sum, the pension system has gained in
coverage, benefits generosity, and coordination.
Colombia
Enactment of IRAs
The structural reform started in 1994 after Congress
passed a comprehensive bill reforming both the pen-
sion and health systems. IRAs were introduced to
the pension systems. Workers can either choose to
remain in a reformed defined benefit PAYG scheme
Issue in Brief 9
or move to the privately-managed system. Participa-
tion in IRAs is voluntary for new workers and they
are allowed to switch between both systems. Separate
systems for civil servants and other groups of workers
still remain.
Total contributions to pensions in the fully funded
scheme are 15.5 percent of wages, which includes
10 percent for the IRA, 4 percent for administration
fees and insurance premiums, and 1.5 percent for the
Minimum Pension Guarantee Fund. High-income
workers have an additional wage contribution, which
finances a Solidarity Pension Fund. Resources of
the Solidarity Pension Fund are used to pay social
assistance benefits and to finance a subsidy that
matches contributions of low-income workers in the
contributory defined benefit scheme. The 15.5 percent
contribution is shared by employers (11.63 percent)
and workers (3.88 percent).
The retirement age was harmonized and increased
to 57 for women and 62 for men. In the IRA scheme,
there is no minimum retirement age but a minimum
account balance is required. Payout options are annu-
ity or scheduled withdrawal.
The IRA scheme is supervised by the Superinten-
dence of Banks and the Ministry of Labor and Social
Security. COLPENSIONES (formerly the Social Secu-
rity Institute) administers the public program nation-
ally and supervises regional funds and local offices.
Retrenchment and Improvement of IRAs
A Solidarity Pension Fund and a Minimum Pension
Guarantee Fund were added to the system. The Soli-
darity Pension Fund pays non-contributory benefits
and matches contributions for low-income formal
workers. In addition, numerous legal modifications
have introduced additional schemes and funding to
improve fairness and solidarity of the system. For
example, Colombia abolished privileged pensions and
will start increasing the retirement age and requir-
ing self-employed workers to gradually join the IRA
system. Also, in 2008, a bill was sent to Congress
proposing that the IRA scheme introduce a “multi-
funds” format allowing affiliates to choose among
three different investment portfolios. The bill also
requires that each fund management company yield
a minimum rate of return for each type of pension
fund, in addition to a minimum rate of return based
on the average annual rate of return for all the fund
management companies in the system.
Costa Rica
Enactment of IRAs
In 2001, Costa Rica introduced IRAs as a supplement
to the PAYG pension scheme. The result is a mixed
pension system. Public and private sector employees
as well as the self-employed are covered under the
PAYG, but IRAs are mandatory just for public and
private sector employees. Special systems for teach-
ers and employees of the Justice Department remain.
Contributions to IRAs are 1 percent of earnings for
employees and 1.75 percent of payroll for employers.
The PAYG scheme is funded with worker, employer
and government contributions. Workers contribute
2.5 percent of their gross earnings and employers
contribute 4.75 percent of payroll. Self-employed
workers contribute between 4.75 percent and 7.25
percent of their gross declared earnings. In addition,
the government contributes 0.25 percent of the gross
income of all workers.
The retirement ages are 61 and 11 months for
men and 59 and 11 months for women. Additionally,
under the PAYG scheme, beneficiaries are required to
have contributed for 240 months. Individuals aged
65 with at least 15 years of contributions are entitled
to a reduced pension benefit.
IRAs are administered by Pension Operators, who
are regulated and supervised by the Superintendence
of Pensions. Also the National Council for the Su-
pervision of the Financial System provides regulatory
oversight. The PAYG scheme is administered by the
Social Insurance Fund, which is directed by an execu-
tive president and a nine-member board.
Retrenchment and
Improvement of IRAs
With the aim to guarantee the long-term solvency of
the system, major changes to the PAYG scheme were
implemented in 2006. Workers over age 55 were
not affected, and transition rules apply to workers
between the ages of 45 and 55. For workers under age
45, the following changes were introduced:
The combined contribution rate from employees, 1)
employers, and the government will be gradually
raised over a 30-year period from 7.5 percent of
earnings to 10.5 percent.
Center for Retirement Research
10
The new basis for calculating the benefit is given 2)
by the average earnings over the last 20 years,
adjusted for inflation, replacing the previous
method of the highest 48 monthly contributions
during the last five years of coverage.
The minimum number of required monthly con-3)
tributions was raised from 240 to 300.
A separate disability benefit – 50 percent of the 4)
full disability benefit – was set up for workers
aged 48 and older with at least five years of con-
tributions. For all other workers, the 10 years of
contributions requirement has persisted.
Dominican Republic
Enactment of IRAs
The reform implemented in 2003 replaced the old
PAYG scheme with mandatory IRAs for all public
and private sector workers, employers, and Domini-
can citizens living abroad, but not the self-employed.
During the transition, coverage was mandatory for
private sector workers younger than age 45 in 2003,
but voluntary for workers aged 45 or older and cur-
rent public sector employees. The reformed system
also includes a social assistance pension for severely
disabled, indigent, unemployed, or self-employed
people with income below the minimum wage.
IRAs are fully funded by mandatory contributions
of the insured person and the employer. The insured
person contributes 4.4 percent of covered earnings up
to 20 times the minimum wage, with 2.87 percent of
covered earnings going directly to the IRA, 1 percent
going to disability and survivor insurance, 0.5 percent
to administrative fees of fund management compa-
nies and 0.07 percent to cover operating costs of the
supervisory institution. The government guarantees
a minimum pension and finances the total cost of the
social assistance pension.
IRA benefits can be claimed at age 60 with 30
years of contributions or more, or as early as age 55
if the IRA balance is at least equal to the minimum
pension. Early benefits are also available at age 57
for unemployed workers with at least 300 months
of contributions, or reduced benefits if less than 300
months. Gainful activity can continue after claiming
benefits and benefits are not payable abroad. The so-
cial assistance pension is income-tested and payable
at age 60 to indigents.
The National Social Security Board provides overall
governance of the pension system and the Superin-
tendence of Pensions provides general supervision.
Retrenchment and Improvement of IRAs
There is a plan to implement a system of subsidized
mandatory individual accounts for the self-employed.
El Salvador
Enactment of IRAs
The reform was implemented in 1998, when the
country replaced the old pension system and fully
privatized it. All new employees and all younger em-
ployees (those who were under age 36 in 1998) were
required to enroll in the funded scheme. The old sys-
tem remained in place for older employees (insured
men older than 55 or women older than 50) but it has
been gradually phased out. Participation in the new
system was voluntary for those between the ages of 36
and 55 (men) or 50 (women) at the time of the reform.
Participation is also voluntary for the self-employed
and owners of small enterprises.
Under the funded scheme, contribution rates were
initially set at 4.5 percent – approximately two-thirds
payable by employers and one-third by workers. In
addition, workers had to pay an insurance premium
to cover the risks of disability and survivorship as
well as an administration fee charged by the private
fund managers. For those remaining in the old
system, and seeking to provide an incentive for affili-
ates to switch over to the new system, contribution
rates were set at 8 percent. Currently, in the funded
scheme, total contribution rates are very similar
for both employers and workers – 6.75 percent and
6.25 percent, respectively. In the PAYG scheme, the
contribution rates are 7 percent for both employers
and workers. Voluntary contribution for the self-em-
ployed is 13 percent of declared covered earnings, plus
up to a maximum of 3 percent of declared covered
earnings for disability and survivor insurance and
administrative fees.
Issue in Brief 11
Entitlement to pension benefits requires 25 years
of contributions. The age requirements are 60
for men and 55 for women. However, under both
systems, workers with 30 years of contributions are
allowed to retire regardless of their age. The gov-
ernment guarantees a minimum pension for those
insured under the new system. In addition to the pre-
vious requirements, access to the guaranteed mini-
mum pension – subsidized by the government – is
restricted to those insured individuals whose pension
(based on the value of the accumulated capital plus
accrued interest) is less than the minimum pension
set by law and who have no other income.
IRAs are operated by Pension Fund Management
companies, which are supervised by the Superinten-
dent of Pensions. The PAYG scheme is administered
by the Social Insurance Institute, which is supervised
by a board of 12 directors including the Minister of
Labor, representatives of other ministries, the Direc-
tor of Social Insurance, and representatives of man-
agement, labor and other professional groups.
Retrenchment and Improvement of IRAs
Beginning in late 2003, pensioners who retire under
the new system and whose retirement benefit is less
than what they would have received if they had re-
mained in the old PAYG scheme receive an additional
benefit subsidized by the government. In addition, a
number of reforms have been introduced in the past
few years in order to improve the IRA system:
In order to encourage later retirement and boost 1)
IRA balances, the government established that,
regardless of having 30 years of contribution, the
minimum retirement ages are 60 years for men
and 55 for women.
Beginning in mid-2006, fund managers were 2)
required to lower their administrative fees to
allow workers to save more for retirement. The
maximum combined fee that they can charge for
administration and for survivors and disability
insurance was decreased from 3 percent to 2.7
percent of earnings and the cost was shifted from
the worker to the employer.
In order to reduce the costs linked to frequent 3)
transfers between the two private fund manag-
ers existing in the country, workers will have to
remain with one private fund manager at least
one year instead of only six months.
Mexico
Enactment of IRAs
In 1997 Mexico implemented IRAs meant to replace
the PAYG scheme in the long term. The PAYG
scheme continued to cover some employees in ag-
ricultural and credit union cooperatives that joined
before 1997. IRAs are mandatory for all private sector
employees and cooperative members entering the
labor force after 1997. Participation is voluntary for
public sector employees not covered by other systems.
Special systems for oil workers, public sector employ-
ees, and military personnel still exist.
IRAs are funded by employers, employees, and the
government. Employees contribute 1.125 percent of
covered earnings, plus an average of 0.625 percent
for disability and survivor benefits, and an additional
amount for administrative fees. Employers contrib-
ute 5.15 percent of covered payroll, plus an average
of 1.75 percent for disability and survivor benefits.
Self-employed workers contribute 6.275 percent of
declared earnings, 2.375 percent for disability and
survivor benefits, and an additional amount for
administrative fees. The government contributes
0.225 percent of salary for workers under the PAYG
scheme, plus 0.125 percent of covered earnings for
disability and survivor benefits. The government also
finances the guaranteed minimum pension and pro-
vides a subsidy for each day of an entire working life
that workers contribute to individual accounts. This
subsidy is deposited into workers’ IRA accounts every
2 months.
Under the funded scheme, the retirement age is 65
years for both men and women, and individuals must
have contributed for at least 1,250 weeks. Those with
less than 1,250 weekly contributions may continue to
contribute or receive a lump-sum benefit. The same
age and years of contributions are required for access-
ing the minimum pension, which is guaranteed to
those individuals whose pension benefit (based on the
value of the accumulated capital plus accrued inter-
est) is less than the minimum pension. Early retire-
ment is possible at any age for those whose individual
account balance is sufficient to purchase an annuity
that is at least 30 percent greater than the value of
the minimum guaranteed pension. Also, individuals
aged 60 to 64 with at least 1,250 weekly contributions
who are unable to find suitable paid employment
may access an unemployed worker’s pension ben-
efit. Individuals covered by the PAYG scheme must
Center for Retirement Research
12
contribute for at least 500 weeks and are allowed to
retire at the age of 65. Individuals aged 60 to 64 with
at least 500 weeks of contributions who are unable to
find suitable paid employment may access their funds
as an unemployed worker’s pension benefit.
IRAs are operated by pension fund management
companies, which are supervised by the National
Commission for the Retirement Savings System
(CONSAR). The PAYG scheme is administered by
the Social Security Institute though regional and local
boards.
Retrenchment and Improvement of IRAs
Since 1997, a large number of reforms to improve
and strengthen the IRA scheme have been imple-
mented in Mexico:
In 2005, to expand pension coverage, the self-1)
employed were allowed to set up an IRA. Also,
two new pension fund management companies
were authorized. Millions of low-income workers
not covered by social security were able to set up
an IRA with one of these companies.
Beginning in 2008, all new public sector em-2)
ployees are required to join the funded scheme.
Those already working in the public sector under
age 46 had the option to join a new pension
fund manager – called PENSIONISSSTE – or
to remain in the PAYG scheme and receive a
recognition bond for the value of their accrued
rights under the PAYG scheme. For the first
three years, PENSIONISSSTE will manage the
public employee’s IRAs. In the fourth year, pub-
lic employees will be allowed to switch to any of
the pension fund management companies, and
PENSIONISSSTE will continue to manage IRAs
for public employees who do not chose another
pension fund manager. Beginning in the fifth
year of operation, public employees will be able to
switch to another pension fund manager or back
to PENSIONISSSTE once a year. PENSION-
ISSSTE is directed by an 18-member executive
commission of representatives from worker
organizations and government agencies, as well
as the Institute of Social Security and Health for
public sector employees. The CONSAR, which
is the regulatory and supervisory agency for the
IRA scheme for private sector workers, will also
oversee PENSIONISSSTE. The administrative
fees that PENSIONISSSTE charges account hold-
ers may not be higher than the average fees for all
the pension fund management companies.
To stimulate competition among private fund 3)
managers, in 2005 workers were allowed to
switch to a company charging lower administra-
tive fees at any time, rather than just once a year.
Starting in 2008, pension fund managers are no 4)
longer allowed to charge account holders a fee
on their monthly contributions; they can only
charge a fee on the IRA balances. Also, in order
to increase competition, it was established that
the regulator calculates a net rate of return indica-
tor to allow account holders to compare the net
rates of return of different pension fund manag-
ers for the previous 36 months. New entrants to
the labor force who do not choose a pension fund
manager are automatically assigned to the one
with the highest net rate of return at that time.
Pension funds were initially limited to investing 5)
in government instruments, but in 2004 pen-
sion fund management companies were allowed
to invest 15 percent of assets in various approved
equity indices and 20 percent in foreign debt.
Further, in 2007, the limit on equity investments
was raised from 15 percent to 30 percent.
Before 2004, each pension fund management 6)
company was limited to offering one fund for
mandatory contributions and another for addi-
tional voluntary contributions. Since late 2004,
each company can offer two types of pension
funds. Workers under age 56 can choose be-
tween a fund that invests mainly in fixed-income
securities and one that invests up to 15 percent
of assets in approved equity indexes. Further
reforms implemented in 2007 established that
each pension fund manager may offer five differ-
ent funds with varying levels of risk designated
for specific age groups. The new funds range
from the highest risk level available, Fund 1
(for workers aged 18–26) with up to 30 percent
invested in equities, to the least risky Fund 5 (for
workers aged 56–65) with portfolios containing
fixed income. Younger workers who are not com-
fortable with the level of risk in the fund desig-
nated for their age group are permitted to change
to a fund designated for an older age group.
Issue in Brief 13
Panama
Enactment of IRAs
Panama introduced IRAs as a supplement to the
PAYG scheme in January, 2008. Under this mixed
pension system, IRAs are mandatory for new en-
trants to the labor force and all self-employed workers
younger than age 36. Other workers have the option
to switch to the new system or remain under the pub-
lic PAYG scheme.
Retrenchment and Improvement of IRAs
The system was implemented recently and there are
no important changes to date.
Peru
Enactment of IRAs
Peru introduced IRAs in 1993 in parallel to the PAYG
scheme. Workers are allowed to opt for either system.
Those who do not make a choice become members
of the funded scheme automatically. Those who
opt for the PAYG scheme may switch to the funded
scheme but have no option to switch back. The PAYG
scheme covers wage earners and salaried employ-
ees in the private and public sectors, employees of
worker-owned and cooperative enterprises, teachers,
self-employed drivers, artists, domestic workers, sea-
men, journalists, tannery workers, and self-employed
agricultural workers. Special systems operate for
fishermen, military and police personnel. Coverage is
voluntary for certain self-employed persons, for those
who are economically active but no longer in covered
employment (a minimum of 18 months previous
coverage is required), and housewives. The funded
scheme provides coverage to private and public sector
employees.
Contributions to the PAYG scheme are approxi-
mately 13 percent of gross earnings for both employ-
ees and self-employed workers. Under the funded
scheme, both employees and self-employed workers
contribute 10 percent of gross earnings, plus an aver-
age 0.91 percent of covered earnings for disability and
survivor insurance and an average of 1.81 percent of
gross earnings for administrative fees. Between 1995
and 2006, the contribution rate under the funded
scheme was “temporarily” reduced to 8 percent in or-
der to encourage participation. Whether in the PAYG
or the funded scheme, employers do not contribute to
the system and the government finances the mini-
mum pension.
Conditions for retiring under the PAYG scheme
are 60 years of age and at least 20 years of contribu-
tions for both men and women. Early retirement is
allowed under the following conditions: 55 years of
age and at least 30 years of contributions for men or
50 years of age and at least 25 years of contributions
for women; or 55 years of age and at least 20 years of
contributions for both men and women in the event
of a collective lay-off from employment. Under the
funded scheme, the retirement age is 65 but individu-
als are allowed to retire at any age if the individual ac-
count has accumulated assets that will replace at least
50 percent of average indexed earnings in the last 120
months. To receive a guaranteed minimum pension,
individuals must: be born before 1946, be at least 65
years old, have made at least 20 years of contributions
paid on earnings equal to or more than the minimum
wage, and be entitled to a pension payable (based
on the value of the accumulated capital plus accrued
interest) that is less than the minimum pension.
The PAYG scheme is administered by the Office
of Social Security Normalization. Contributions are
collected by the National Superintendence of Tax
Administration and the Comptroller General of the
Republic provides general supervision. Pension fund
administrators manage the individual accounts and
the Superintendence of Banks, Insurance, and Pen-
sion Fund Administrators licenses and supervises
pension fund and insurance companies.
Retrenchment and Improvement of IRAs
With the purpose of providing a higher pension to
those workers who would have received a much lower
pension if they remained in the funded scheme, be-
ginning in 2007 certain workers enrolled in privately-
managed individual retirement accounts may perma-
nently switch back to the PAYG scheme. Workers
permitted to leave the funded scheme must have been
a contributor to the public system before 1996 and
must have been eligible to retire under the public
system at that time or when they joined the individual
account system.
Starting in 2003, several other reforms have been
implemented with the aim of improving the IRA
scheme:
Center for Retirement Research
14
Since late 2003, pension fund managers must 1)
use a competitive bidding process to select an
insurance company to provide the survivors and
disability insurance rather than the “no-bid pro-
cess” they used in the past.
In 2006, the contribution rate automatically 2)
rose to 10 percent of earnings because Congress
did not vote to keep it at the reduced level of 8
percent.
Until late 2005, each pension management com-3)
pany could offer only a single fund with limited
investments. Beginning in 2006, workers with
individual accounts are permitted to choose a
fund from among three different types with
varying degrees of risk: Type 1 is a preservation
of capital fund with up to 10 percent in equities
and up to 100 percent in fixed income; Type 2 is
a mixed or balanced fund with up to 45 percent
in equities (the original fund when only one was
permitted); and Type 3 is a growth fund, with up
to 80 percent in equities and up to 70 percent in
fixed income. Workers who do not make a choice
are assigned to Type 2. Account holders over the
age of 60 are automatically assigned to a Type 1
fund to reduce their portfolio risk.
In 2005, the rules for transferring from one 4)
pension fund manager to another were eased.
Previously, a worker opting to switch funds had
to make at least six monthly contributions to one
fund, pay an exit fee, and wait 10 months for the
process to be completed. Under the new law,
the worker needs only be enrolled with a pen-
sion fund manager, the fee is eliminated, and
the process should take 2 to 3 months. Also, an
account holder must choose one type of fund for
the mandatory contribution and may set up a sec-
ond account with another company for additional
voluntary contributions.
By late 2006, Peru’s Central Reserve Bank 5)
increased the limit on how much pension fund
management companies can invest abroad.
The limit was increased from 10.2 percent to 12
percent of assets under management and future
incremental increases may be gradually autho-
rized, until the limit reaches the legal maximum
of 20 percent.
Uruguay
Enactment of IRAs
Uruguay introduced IRAs in 1996. The PAYG
scheme remains open and plays a significant role
because only high income workers were mandated to
contribute to IRAs. Workers below a threshold level
can choose to split contributions between the PAYG
scheme and IRAs. The mixed system is mandatory
for both employed and self-employed people born
after April 1, 1956. However, contributions to IRAs
are voluntary for workers with monthly income below
a minimum set by law. Civil servants are included in
the general system.
The total payroll tax rate was kept at the pre-reform
level (27.5 percent for pensions). For those work-
ers opting for IRAs, the employee contribution was
established at 15 percent of wages. Administration
fees and insurance premiums are deducted from the
15 percent; in 2006, these charges reached about 2.7
percent of wages. Employers also contribute 12.5
percent of wages for pensions, but these resources
are directed to the public system. The government
pays the total cost of non-contributory pensions and
finances deficits with earmarked taxes. For payout,
only annuities are allowed.
For both the public and private components, the
retirement age was increased to 60 for men and
women, and the minimum period of contributions to
be entitled was set at 35 years. At age 65, IRA benefits
can be received with no minimum required years of
contribution.
The Social Insurance Institute administers the
social insurance program and collaborates with the
supervision of IRAs. A specialized unit in the Central
Bank oversees pension fund management and insur-
ance companies.
Retrenchment and Improvement of IRAs
Few changes have been introduced in the pension
system since the reform. In 2008, a decree gave
some workers the right to withdraw from the IRA
system and become entitled to the benefit paid by
the PAYG scheme. This decree applies only to those
workers who were 40 years or older at the time of the
reform.
Also in 2008, pension fund management compa-
nies were allowed to invest 15 percent of their assets
in foreign instruments. Before this reform, almost
60 percent was invested in government debt.
Issue in Brief 15
Endnotes
1 Brazil is not included in this discussion because it
reformed its pension system without moving towards
IRAs. Brazil, however, has a long history with occupa-
tional plans managed by private companies and, more
recently, legislation has allowed sub-national state
governments to create supplementary occupational
pension plans.
2 The case of Panama is only discussed in the appen-
dix, as IRAs were only enacted recently and no major
revisions have been introduced to the system.
3 Economic Commission for Latin America and the
Caribbean (ECLAC) (2006); Rofman and Lucchetti
(2006); and Mesa-Lago (2008).
4 Bertranou (2004); Calvo and Williamson (2008);
and Federación Internacional de Administradoras de
Fondos de Pensiones (2006).
5 Mesa-Lago (2004b, 2008).
6 Bertranou, Rofman, and Grushka (2003); Calvo
and Williamson (2008); and Gill, Packard, and Yermo
(2005). Although PAYG may also suffer from weak
regulations, IRAs were oversold in their capacity to
prevent political manipulation.
7 Barr (2002); Kay and Sinha (2008); Schulz (2009);
and Williamson (2001). As pointed out by Béland
and Gran (2008), the line between private and public
can be “fuzzy” when states regulate, promote, finance,
and mandate private pension provision.
8 Barr and Diamond (2008); Kritzer (2008); and Vial
and Melguizo (2008).
9 U.S. Social Security Administration (2007-09,
2007-04, 2005-02, 2004-04).
10 Insured individuals with low balances were de-
fined as those that, at the normal age of retirement,
would not be able to buy an annuity equivalent to
the minimum pension paid by the defined benefit
scheme.
11 This change means that for a worker retiring with
30 years of contributions, the replacement rate would
increase from 25.5 percent (30*0.85) to 45 percent
(30*1.5). Note that this benefit is paid on top of the
basic pension.
12 Cottani (2008); The Economist (2008); Poder
Ejecutivo Nacional (2008); and The Wall Street Journal
(2008).
13 Consejo Asesor Presidencial Para la Reforma Pre-
visional (2006); and U.S. Social Security Administra-
tion (2008-02, 2007-01, 2006-07, 2003-12).
14 Barrientos (2006).
15 U.S. Social Security Administration (2007-09,
2006-09).
16 Consejo Asesor Presidencial Para la Reforma
Previsional (2006); and U.S. Social Security Admin-
istration (2008-02, 2007-01, 2006-08, 2006-07,
2005-05).
17 James, Packard, and Holzmann (2008).
18 U.S. Social Security Administration (2008-04,
2008-02, 2007-11, 2007-06, 2007-04, 2006-11,
2006-09, 2006-08, 2006-03, 2005-12, 2005-09,
2005-05, 2003-12).
19 U.S. Social Security Administration (2008-04,
2007-08, 2006-12, 2006-08, 2006-01, 2005-03,
2004-06, 2003-12, 2003-10).
20 Unless otherwise specified, the information pre-
sented in this appendix was drawn from U.S. Social
Security Administration (2003-2008) and (2008b);
and Asociación Internacional de Organismos de Su-
pervisión de Fondos de Pensiones (2007).
21 Workers in transition were those who contributed
to the pre-reform system and remain in the labor
market under the new system.
Center for Retirement Research
16
Issue in Brief 17
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Center for Retirement Research
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About the Center
The Center for Retirement Research at Boston Col-
lege was established in 1998 through a grant from the
Social Security Administration. The Center’s mission
is to produce first-class research and forge a strong
link between the academic community and decision
makers in the public and private sectors around an
issue of critical importance to the nation’s future.
To achieve this mission, the Center sponsors a wide
variety of research projects, transmits new findings to
a broad audience, trains new scholars, and broadens
access to valuable data sources. Since its inception,
the Center has established a reputation as an authori-
tative source of information on all major aspects of
the retirement income debate.
Affiliated Institutions
The Brookings Institution
Massachusetts Institute of Technology
Syracuse University
Urban Institute
Contact Information
Center for Retirement Research
Boston College
Hovey House
140 Commonwealth Avenue
Chestnut Hill, MA 02467-3808
Phone: (617) 552-1762
Fax: (617) 552-0191
E-mail: crr@bc.edu
Website: http://www.bc.edu/crr
© 2009, by Trustees of Boston College, Center for Retire-
ment Research. All rights reserved. Short sections of text,
not to exceed two paragraphs, may be quoted without ex-
plicit permission provided that the authors are identified and
full credit, including copyright notice, is given to Trustees of
Boston College, Center for Retirement Research.
The research reported herein was supported by the Center’s
Partnership Program. The opinions and conclusions ex-
pressed are solely those of the authors and do not represent
the opinions of the partners or the Center for Retirement
Research at Boston College.
The Center for Retirement Research thanks AARP, AIM Investments, Bank of America, ING, MetLife,
Nationwide Mutual Insurance Company, Prudential Financial, State Street, TIAA-CREF Institute, and
T. Rowe Price for support of this project.
