Pension reform in Bolivia: two models of income security in old age

Since the 1980s, two alternative approaches for financing and organizing pensions for older people have emerged across developing regions. These are: (1) contributory schemes, taking the form of capitalized individual accounts, usually managed by private firms; (2) government funded non-contributory “social pensions” provided on either a means-tested or universal basis. Both these approaches are influential in Latin America, where they have often come to replace long-standing defined benefit schemes. Indeed, Chile was a pioneer of the first approach, implementing a reform in 1980, and it continues to be seen as a model for pension reforms in countries as diverse as Nigeria and India. Since the 1960s, Brazil has developed a substantial social pension programme which runs alongside contributory schemes for protected workers. More recently, social pension programmes have become more widespread in Latin America, including new and enlarged schemes in Mexico, Colombia and Argentina.