II International Conference II International Conference of Pension Fundsof Pension Funds

SantiagoMarch 2001

Contribution Rates and Contribution Rates and Benefits of the Private Benefits of the Private

Pension Systems in Pension Systems in Latin AmericaLatin America

Jaime Cáceres SayánVicepresident FIAP

FIRST PILLAR: The minimum pension, guaranteed by the government (for those workers whose contributions are not enough to achieve this pension level).

SECOND PILLAR: The compulsory contribution.

THIRD PILLAR: The voluntary contribution.

Pension FinancingPension Financing

Main Objective: The PensionMain Objective: The Pension

The success of a pension system is measured by the income level obtained by the affiliate at the time of retirement. With the contributions and the return provided by the investment of the funds, the affiliate should be able to retire with a 70% to 80% of its remuneration.

PENSION= PENSION= ff (CONTRIBUTIONS; RETURN; TIME; (CONTRIBUTIONS; RETURN; TIME; AGE)AGE)

The return rate plays a fundamental rol beside the contributions. About a 4% to 5% return is the minimum necessary to obtain a 70% to 80% replacement rate, with a 10% contribution rate.

All countries in the region have exceeded the 5% return.

The Contribution and Replacement Rate inThe Contribution and Replacement Rate inCountries with pension reformCountries with pension reform

Country Contribution

Rate

Age of

Retirement

Contrib.Years

Male

Contrib.

Years

Female

Replace.

Rate

Male

Replace.

Rate

Female

Argentina 7.4% 65/60 40 35 78% 48%

Bolivia 10% 65 40 40 105% 105%

Chile 10% 65/60 40 35 105% 65%

Colombia 10% 62/57 37 32 78% 50%

El Salvador 8.5% 60/55 35 30 55% 36%

México 6.5% 65 40 40 68% 68%

Perú 8% 65 40 40 84% 84%

Uruguay 12.3% 60 35 35 80% 80%

Affiliation Age: 25 yearsReturn: 5% realLife expectance: 80 yearsCessation Rate: 10%

Average: 82% 67%Average: 82% 67%Assumptions:

COUNTRY Employee Employer Government

Argentina X X

Bolivia X X

Chile X

Colombia X X

El Salvador X X

México X X X

Perú X

Uruguay X

Brasil X X

Costa Rica X X X

Ecuador X X X

Guatemala X X X

República Dominicana X X X

PrivateSystems

PublicSystems

Contribution FinancingContribution Financing

Types of Benefits in Countries with Types of Benefits in Countries with pension reformpension reform

ARG BOL CHI COL EL S MEX PER URU

Retirement Age

Male 65 65 65 62 60 65 65 60

Female 60 65 60 57 55 65 65 60

Anticipated Retirement X X X X X X

Discapacity Pension X X X X X X X X

Survival Pension X X X X X X X X

Deferred Pension X

Types of Benefits in Countries with Types of Benefits in Countries with an on-going pension reforman on-going pension reform

BRASIL C. RICA ECUADOR R. DOMINIC.

Regular Retirement Public System X X X X

Regular Retirement Private System X X X X

Anticipated Retirement Public System X

Anticipated Retirement Private System X X

Discapacity Public System X X X X

Discapacity Private System X X

Survival Public System X X X X

Survival Private System X X X

Others Public System A,B A,B

Others Private System A,C

A: Disease PensionB: Maternity PensionC: Special Pension, Deferred Pension

Beneficiaries of the newBeneficiaries of the newCapitalization RegimesCapitalization Regimes

Country Total Service

Absolut % Discapacity Retirement Survival

Argentina 57,281 100.0% 14.9% 20.3% 64.8%

Bolivia 629 100.0% 24.6% 0.0% 75.4%

Chile 322,234 100.0% 7.8% 61.6% 30.6%

El Salvador 1,279 100.0% 0.0% 0.0% 100.0%

México * 70,354 100.0% n.a. n.a. n.a.

Perú 17,618 100.0% 5.6% 18.0% 76.5%

Uruguay 1,491 100.0% 16.5% 1.8% 81.7%

TOTAL 470,886 100.0% 8.8% 53.3% 38.0%

December 1999December 1999

* México: Accumulated to January 2001

II International Conference II International Conference of Pension Fundsof Pension Funds

SantiagoMarch 2001

Contribution Rates and Contribution Rates and Benefits of the Private Benefits of the Private

Pension Systems in Pension Systems in Latin AmericaLatin America

Jaime Cáceres SayánVicepresident FIAP