National Debt Clock

Monday, May 11, 2009

Social Security Reform

Slovakian Social Security Reform:

"Like the American pay-as-you-go retirement scheme, the pre-reform Slovak public pension system faced adverse demographic trends and long-term financial shortfalls. In 2003, Martin Chren, a Slovak economist, estimated there were only 132 workers per 100 pensioners in Slovakia. Projections showed that pensioners would outnumber workers by 2040, at which point each worker would have to pay for the retirement benefits of more than one elderly person."

Chilean Social Security Reform:

"There have been enormous external benefits: the savings rate of Chile was 10% of gross national product traditionally. It has gone up to 27% of GNP. The payroll tax in Chile is zero. Of course we have an estate tax and an income tax, but not a payroll tax. With full employment and a 27% savings rate, the rate of growth of the Chilean economy has doubled."

"Since the Chilean system was implemented, labor force participation, pension fund assets, and benefits have all grown. Today, more than 95 percent of Chilean workers have joined the system; the pension funds have accumulated over $50 billion in assets, a sum that is equivalent to about 67 percent of Chilean gross domestic product; and the average real rate of return has been over 10 percent per year."

No comments:

Post a Comment