Many pension systems in Latin America face problems of coverage and financial sustainability. The Bismarckian systems where workers and their employers make mandatory contributions to finance benefits are not suited to cover many workers who are farmers or self-employed. In addition, small, low productivity firms often cannot afford the pay-roll taxes needed to sustain growing pensions outlays and hire workers under informal contracts. Various countries have setup parallel non-contributory programs to cover the informal sector and the elderly poor. But there is some evidence that these programs tend to further reduce incentives to create and take formal sector jobs.
Mariano Bosch and co-authors from the Inter-American Development Bank (IADB) have authored a book proposing thought provoking ideas to address these problems. In this Google Hangout Mariano will discuss the IADB proposals, and David Robalino, Alvaro Forteza, and Robert Palacios will comment on them and suggest alternatives.