INTRODUCTION

This chapter reports on the international experience with individual account reforms to date. It describes the Chilean reform in some detail, because of its pioneering role and because we know more about it than we do about reforms elsewhere. The account covers the whole reform, but emphasizes the distribution phase, because that is the book's major concern. The chapter then describes and assesses variants of the Chilean reform that have been adopted elsewhere in Latin America and in Eastern and Central Europe.

THE CHILEAN REFORM

Much has been written about the Chilean reform, both about its technical aspects and the politics behind its creation. The chapter will concentrate on its economic and administrative aspects.

Chile's individual accounts system: basic features

Prior to the adoption of individual accounts, the public pension system in Chile was the main branch of a highly fragmented social security system. This trait, which the Chilean system shared with the systems of the other southern cone countries, Uruguay and Argentina, resulted from the system's piecemeal development. Initially, the employees of an industry like mining, who were able to act collectively to obtain benefits unavailable in other industries, would obtain coverage under a pension plan. Coverage was then extended gradually over many years to other industries and sectors.

As time passed, some consolidation of plans took place, but this was far from complete.