ABSTRACT
A number of Latin American countries have embarked upon a radical reshaping of pension provision in the 1990s, following the example of Chile’s 1981 pension reform. This chapter examines the background to pension reform in Latin America. It reviews the origins and evolution of social insurance pension schemes. The chapter discusses the main factors responsible for the large financial imbalances experienced by the Latin American pension schemes. It explains the rationale for structural reform of social insurance pension schemes. The social insurance pension schemes in place in most Latin American countries developed large financial imbalances in the 1980s. The mounting financial deficits experienced by the social insurance funds were already apparent before the 1980s economic crisis. The rising deficits of social insurance pension schemes and the failure of piecemeal efforts at pension reform were exacerbated by the acute economic crises experienced by Latin American economies.
