Pension reforms: results and challenges

It is not very long since the crisis of the pay-as-you-go social
security systems in both Latin America and Central Europe gave
rise to the creation of schemes based on the individual
capitalization and private management of savings.
However, sufficient time has passed to enable an evaluation to be
made of the first trends to be shown by these systems and to
compare them with the results of the pay-as-you-go social security
schemes.
That is the challenge that we gave ourselves in the Seminar
“Results and Challenges of Pension Reforms”, where we analysed
the results of the new system, from the point of view of both its
contribution in improving pensions and the part it has played in
the economic growth of the countries concerned.
In order to do this we have checked the rates of return on the
investments of social security resources and compared them with
the growth in workers’ earnings, which is the basis used for
calculating pensions under the pay-as-you-go systems; we have
measured the impact of this reform on saving, investment and the
depth of capital markets, in an attempt to measure its contribution
to the economic development of the countries.
We have also analysed the influence that a system based on private
ownership of savings may have on public policies, and its ability
to resist pressures that might undermine the integrity and final
purpose of these assets.
For this task we have had the invaluable support of outstanding
specialists in various subjects, and I take this opportunity to thank
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Pension Reforms: Results and Challenges
them for the significant contribution that they have made to the
future development of these systems.
The social security reform has been a radical change.
Capitalization replaces pay-as-you-go; private management
replaces that of the state; flexibility replaces inflexibility.
For this reason we must make the effort to show both those who
carried out the reform and those who are watching the experience
with interest, that the decision was a right one. The social security
reform, based on individual capitalization and private fundmanagement, has brought our workers and our countries
significant benefits and will continue to do so in the future.