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Chile’s Private Pension Plan. Who benefits?. By: Nitish Rajbhandary, Catie Whelan, Kevin Slattery. Introduction. Thesis Statement History of Pension System in Chile Benefits of the System Problems with the System Recommended Reforms Conclusion. Thesis.
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Chile’s Private Pension Plan Who benefits? By: Nitish Rajbhandary, Catie Whelan, Kevin Slattery
Introduction • Thesis Statement • History of Pension System in Chile • Benefits of the System • Problems with the System • Recommended Reforms • Conclusion
Thesis Chile’s private pension system functions well when workers contribute on a regular basis. However, the pensions plan fails vulnerable groups such as women, unemployed, and self employed workers.
History • Pay-as-you-go-system • Privatized under Pinochet in 1981 • Why was it privatized? • Fiscal pressure • Redistributive features • How system functions
Benefits • Reduce Government Obligations • Encourages Savings • Possible Economic Growth • Employer may pay • High Rates of Return
Problems • Difficult to Diversify Holdings • Competition • AFP Commission Cost • Coverage
Reforms • Labor Law Reforms • Increase Holding Diversification • Minimum Pension Guarantee • Gender Reforms • Default coverage for self-employed
Conclusion Chile’s pension system provides better coverage than Social Security in the United States, however it still needs some reforms in order to cover everyone. Women, unemployed and self-employed are the most at risk of not receiving an adequate pension after retirement.
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