Call for pension reform in Latin America and Caribbean
By Judith Ugwumadu | 21 October 2013
Latin American and Caribbean governments must move towards universal pensions coverage so people are better prepared for retirement, the Inter-American Development Bank has said.
Currently only four in ten people over 65 save for retirement in the region and most pensions are worth less than $10 a day. This inadequate provision is likely to trigger a situation that could have serious social and economic consequences as the population ages, the bank said.
By 2050, up to 140 million people in the region will reach retirement age and, without adequate reforms, around 83 million people would not have contributed enough to receive a pension, the IDB warned.
However, according to its Better pensions, better jobs: towards universal coverage in Latin America and the Caribbean report there is a possibility that an adequate pension could be guaranteed for all citizens.
IDB president Luis Alberto Moreno pointed out that the creation of formal jobs across the Caribbean and in Latin America was key to assuring a sustainable pension systems.
‘We believe that pension reform would not only provide incentives to boost formal employment and productivity, but also encourage investments in infrastructure and human capital in the region,’ he said.
Carmen Pages-Serra, head of the IDB’s labour markets and social security unit and co-author of the report, added: ‘Reform goes hand in hand with establishing sustainable and efficient anti-poverty pension schemes and simultaneously encouraging the growth of formal employment, for example, by subsidising pension contributions. Moreover, advances are required in the areas of financial controls, information and education.’
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