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II International Conference of Pension Funds

II International Conference of Pension Funds. Contribution Rates and Benefits of the Private Pension Systems in Latin America. Jaime Cáceres Sayán Vicepresident FIAP. Santiago March 2001. Pension Financing.

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II International Conference of Pension Funds

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  1. II International Conference of Pension Funds Contribution Rates and Benefits of the Private Pension Systems in Latin America Jaime Cáceres Sayán Vicepresident FIAP Santiago March 2001

  2. Pension Financing • 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.

  3. Main 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= f (CONTRIBUTIONS; RETURN; TIME; 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.

  4. The Contribution and Replacement Rate in Countries with pension reform Affiliation Age: 25 years Return: 5% real Life expectance: 80 years Cessation Rate: 10% Average: 82% 67% Assumptions:

  5. Contribution Financing Private Systems Public Systems

  6. Types of Benefits in Countries with pension reform

  7. Types of Benefits in Countries with an on-going pension reform A: Disease Pension B: Maternity Pension C: Special Pension, Deferred Pension

  8. Beneficiaries of the newCapitalization Regimes December 1999 * México: Accumulated to January 2001

  9. II International Conference of Pension Funds Contribution Rates and Benefits of the Private Pension Systems in Latin America Jaime Cáceres Sayán Vicepresident FIAP Santiago March 2001

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