1. Pension Reform in Bolivia: A Review of Approach and Experience
- Author:
- Federico Escobar and Osvaldo Nina
- Publication Date:
- 06-2004
- Content Type:
- Working Paper
- Institution:
- Institute for Advanced Development Studies (INESAD)
- Abstract:
- The Bolivian pension reform eliminated the old publicly managed pay-as-you-go system and introduced a fully-funded system. The pension reform was highly influenced by the Chilean reform, adopting a second pension component pillar, based on contributions to individual accounts in pension funds, which are managed by decentralized pension-fund management companies and regulated and supervised by the government. Moreover, the new system has followed the substitutive model, where all contributors to the old system, with no exceptions, were automatically transferred to the new one, while those already retired under the old system continued to receive their pensions from the government. The unique feature of the Bolivian pension reform program was its link to the Capitalization. Under this process the six principal state-owned enterprises were capitalized by foreign companies, and the Bolivian government retained 50% of the shares in the capitalized companies. These shares went into a Collective Capitalization Fund, which is managed by the new pension funds, and the dividends are used to finance the BONOSOL program, which is a universal old age income support to all Bolivians 65 and older.
- Topic:
- Economics, Reform, Public Policy, and Pension
- Political Geography:
- South America and Bolivia