pension systems in latin america: concepts and...
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Pension Systems in Latin America:Concepts and Measurements of
CoverageLeonardo Lucchetti and Rafael Rofman
Social Protection, Latin America and the CaribbeanWorld Bank
Contents of the presentation
1. Objectives of the paper2. Measuring Coverage (methodology) 3. Results4. Final comments
Objectives of the paper
Objectives of the paper
1. Collect, review, and process information from household surveys in LAC to measure pension coverage (in the active and passive stage) and some important covariates.
2. Present a first analysis of the data generated from the household surveys to formulate some stylized facts related to the coverage in the region.
Measuring Coverage (methodology)
Methodology
• Data from household surveys, larger level of detail and consistency
• 17 countries from LAC: Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay, and Venezuela
• Timeframe: From 1990 to 2006, when available• Economically active population over the age of 20
and beneficiaries over 65 years old• Two countries with urban coverage (Argentina and
Uruguay), others are national
Indicators
• Participation of Active Workers: (i) contributors/economically active individuals, (ii) contributors/employed persons(iii) contributors/wage earners
• Coverage of the Elderly:(i) pension recipients/individuals over the age of 65(ii) individuals residing in households with pension
recipients over the age of 65
Covariates
• Age group Gender• Geographical areas Occupation• Sector of employment Firm size• Level of education Income quintile
ResultsActive Workers
Source: own, based on Survey of Households.
Participation of labor force is low in most countries, and recent evolution was weak
Figure 1. Coverage Rates for the Economically Active Population
0
10
20
30
40
50
60
70
80
BO PY PE NI GU CO EC SA VE MX AR BR UY CL CR
1990s 2000s
Problems are more serious in private sector, but public sector is also affected
Figure 2. Participation Rates for Employed Workers, by Type of Employer
Source: own, based on Survey of Households. Private 2000s
Private 1990s Public 1990s
Public 2000s
0
20
40
60
80
100
BO PY PE NI0
20
40
60
80
100
GU CO EC SA
0
20
40
60
80
100
VE MX AR BR0
20
40
60
80
100
UY CL CR
The link between firm size and compliance is very clear
Figure 3. Participation Rates for Employed Workers, by Sizes of Establishments
Source: own, based on Survey of Households. Small 1990s
Large 2000s
Large 1990s Medium 1990s
Small 2000s Medium 2000s
0
20
40
60
80
100
BO PY PE NI0
20
40
60
80
100
GU CO EC
0
20
40
60
80
100
VE MX AR BR0
20
40
60
80
100
UY CL CR
Income is most critical: Poor workers are excluded from the system
Figure 4. Participation Rates for the Employed Workers, by Quintile of per capita Income
Q-III (1990s)
Q-III (2000s) Q-II (2000s)
Q-II (1990s) Q-I (1990s)
Q-IV (2000s)
Q-IV (1990s)
Q-I (2000s)
Q-V (1990s)
Q-V (2000s)
0
20
40
60
80
BO PY PE NI0
20
40
60
80
GU CO EC SA
0
20
40
60
80
VE MX AR BR0
20
40
60
80
UY CL CR
Source: own, based on Survey of Households.
In Argentina, poorest quintile was catastrophic, top quintile had a small improvement
Figure 5. Argentina - Participation Rates for Employed Workers, by Quintile of Per capita Income
0
20
40
60
80
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5
ResultsElderly
Extremely low rates in almost all of the countries and the situation is getting worse over the years
Figure 6. Coverage Rates for the Elderly
Source: own, based on Survey of Households.
0
10
20
30
40
50
60
70
80
90
100
GU DR SA PY CO MX PE VE EC PA CR AR BO CL UY BR
1990s - Non cont. 2000s - Non cont. 1990s - Cont. 2000s - Cont.
Coverage increases with the level of education except for those countries with relative larger coverage
Figure 7. Coverage Rates for the Elderly, by Education
Primary 1990s
Superior 2000s
Superior 1990s Secondary 1990s
Primary 2000s Secondary 2000s
0
20
40
60
80
100
GU DR SA PY0
20
40
60
80
100
CO MX PE VE
0
20
40
60
80
100
EC PA CR AR0
20
40
60
80
100
BO CL UY BR
Three groups of countries: Those that protect nobody, those that protect the rich, and those that protect all
Figure 8. Coverage Rates for the Elderly, by Quintile
Q-III (1990s)
Q-III (2000s) Q-II (2000s)
Q-II (1990s) Q-I (1990s)
Q-IV (2000s)
Q-IV (1990s)
Q-I (2000s)
Q-V (1990s)
Q-V (2000s)
0
20
40
60
80
100
GU DR SA PY0
20
40
60
80
100
CO MX PE VE
0
20
40
60
80
100
EC PA CR AR0
20
40
60
80
100
BO CL UY BR
Source: own, based on Survey of Households.
Argentina is moving from protecting all to protecting only the rich
Figure 9. Argentina - Coverage Rates for the Elderly, by Quintile
0
20
40
60
80
100
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5
Final comments
Final comments
• Main goals of the pension systemsPoverty alleviation and income smoothing
• Pension system performanceAddressed by coverage, adequacy, and sustainability
• Most of the region’s countries have serious problems in meeting the basic objectives of their social security systems
Root of the problem: high informality• Coverage problems go beyond public and private
management of the systems• Much remain to be done
Further evaluation, continuation, and analysis of adequacy and sustainability
Thank you