Pension market failure in Chile: foundations, analysis and policy reforms

Abstract

This article takes issue with the increasingly influential argument that the privatisation of pensions can be made to serve the public interest, defined in terms of collectivist values. Focusing on Chile, it shows how privatisation has been informed by the anti-collectivist values of neoliberal political economy. Compared with the previous publicly administered retirement system, Chile's distinctive combination of defined contribution individual accounts, and a means-tested retirement income safety-net, has generated a range of sub-optimal outcomes. The salience of path-dependency means that subsequent reforms have, in all essentials, preserved this anti-collectivist approach to retirement income protection.