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This Congressional Budget Office (CBO) paper describes the design of the pension systems in Chile, the United Kingdom, Australia, Mexico, and Argentina. Those countries have implemented policies that either replace the public pension system with mandatory personal retirement accounts or encourage their workers to opt out of the existing public pension system. The paper also compares the different approaches of those systems and discusses six aspects of the privatization efforts that may have relevance for the Social Security debate in the United States.
Jan Walliser and Scott M. Becker of CBO's Macroeconomic Analysis Division wrote the paper under the supervision of Robert Dennis and Douglas Hamilton. Matthew Berger, Ben Page, Ralph Smith, David Torregrosa, and Christopher Williams made valuable suggestions. Ezra Finkin provided research assistance. Outside CBO, Anita Schwarz of the World Bank; Edward Gramlich, member of the Board of Governors of the Federal Reserve System; and Luis Cubeddu of the International Monetary Fund provided important comments and helpful advice. Liz Williams edited the manuscript. Verlinda Lewis Harris and Dorothy Kornegay prepared the document for publication. Laurie Brown prepared the electronic versions for CBO's World Wide Web site (http://www.cbo.gov).
Questions about the paper may be directed to the Macroeconomic Analysis
Division.
June E. O'Neill
Director
January 1999
II - THE PRIVATIZATION OF PENSIONS IN CHILE
III - THE PENSION SYSTEM IN THE UNITED KINGDOM
IV - PENSION FUNDS AND PUBLIC PENSIONS IN AUSTRALIA
V - THE PRIVATIZATION OF PENSIONS IN MEXICO
VI - THE PENSION SYSTEM IN ARGENTINA
VII - LESSONS FROM OTHER COUNTRIES
TABLES | |
1. | Economic and Demographic Data for the United States and Five Selected Countries, 1996 |
2. | Pension Systems in the United States and Five Selected Countries |
3. | Transition Costs in Chile as a Share of GDP, 1981-2015 |
4. | Limits on Shares of Assets in Certain Investment Instruments for Chile's Pension Funds, 1997 |
5. | National Insurance Contribution Rates in the United Kingdom, Fiscal Year 1998-1999 |
6. | Maximum Tax-Free Contributions to an Appropriate Personal Pension, by Age |
7. | Effect of U.K. Pension Reforms on the Cost of SERPS |
8. | Means-Testing Provisions for the Australian Age-Pension in 1997 |
9. | Mandatory Superannuation Contribution Rates in Australia |
10. | Assets in Australian Superannuation Funds in March 1998 |
11. | Allocation of Assets in Australian Superannuation Funds in March 1998 |
12. | Current Contribution Rates to Mexico's Pension System |
13. | Estimates of the Fiscal Costs of Mexico's Pension Reform |
14. | Fees Charged by AFOREs in Mexico |
15. | Projected Deficit of Argentina's Pension System |
16. | Limits on Shares of Assets in Certain Investment Instruments for Argentina's Pension Funds |
FIGURE | |
1. | Chile's Fiscal Position, 1975-1993 |
BOXES | |
1. | Terms Used in Chile's Pension System |
2. | Terms Used in the United Kingdom's Pension System |
3. | Terms Used in Australia's Pension System |
4. | Terms Used in Mexico's Pension System |
5. | Terms Used in Argentina's Pension System |