TRENDS OF PENSION PLANS IN LATIN AMERICA

In the work, it is considered that social security is gravely deficient in Latin America, not only due to low coverage rates, but also, because the benefits are insufficient, payments tend to be tardy, and some contingencies are not adequately covered. This precarious situation creates a vicious cycle: The precariousness is due in good part to low coverage but at the same time discourages affiliation. It can be observed how in recent years important successes in aspects such as reduction of poverty and improvements in health have been reached, however, this has not resulted in a proportional increase in coverage and social security. In regard to pensions and deficiencies of the traditional distribution model, some sectors, especially businesses, with the support of international financial organisms, have promoted systems of individual financing systems in which each worker creates and finances a particular fund, administered by previously authorized private entities, which invest said funds in the financial markets and grant the beneficiaries a pension in their old age, the amount is not previously defined but instead is determined by the results of the investment, so that cost of the system as well as its risks are passed onto the worker. This has resulted in a series of criticism to private systems, who, on the other hand, have been intensely promoted by its proponents. This controversy has determined that the alternative between solidarity or individual financing be the great topic of debate regarding social security in Latin America. The author examines the benefits and shortcomings of the distribution and individual financing systems and concludes that the need to overcome the shortcomings of the traditional system, cannot set aside the essential purpose of a pension system, which is to achieve that the general elderly population of a certain society be able to obtain, in a permanent and viable way, the resources necessary to live a dignified old age, so that if a pension system does not achieve said purpose, it is not adequate, even if it constitutes an important element for economic growth.