IDB warns that pension systems are not maintained

The pension issue has resumed the discussion after having read the letter of intention of the agreement concluded between the country and the International Monetary Fund, which indicates that the Government intends to proceed with a reform of the system. Experts consider that the scheme in Argentina He does not receive any support since it is estimated that there are only 1.5 contributors for each retiree.when the ratio of badets to liabilities should ideally be three to one.

In the publication Present and future pensions in Latin America and the Caribbean, the IDB states that the countries of the region "Are not prepared for the scenario of rapid aging of the population facing the region, where it is expected that, By 2050, one in five people will be over 65 years old. "

According to this publication, public pay-as-you-go systems are designed to be generous with wage earners throughout their working lives, sometimes harming those who trade below the minimum of years be eligible for a pension (between 10 and 35 years old).

In these systems, The State subsidizes a significant share (about 44%) of the average pension who receive contributions throughout their working lives. "In Latin America and the Caribbean, it is high-income earners who typically contribute more years, which is why high pensions are eventually paid to high-income earners, sometimes leaving low income without a pension, who have not paid the necessary contributions, "she said. Mariano Bosch, Senior Specialist, IDB Labor Markets Division.

"In the absence of changes in the design of benefits, demographic pressures will make systems more generous with the individual, but more expensive for the state "said Bosch.

Public pay-as-you-go systems are designed to be generous with workers who contribute throughout their working lives, sometimes harming those who contribute below the minimum number of years.

On the other hand individual capitalization systemsin countries such as Chile, Colombia, Mexico and Peru, among others, offer a replacement rate of one 40%, ie the amount of the pension to be received represents less than half of the last salary of each worker.

"There is a myth that Latin America and the Caribbean is a young region, but the reality is that is aging much faster than the rest of the world "as he explains Carmen Pagés, Head of the IDB Labor Market Division.