The Shift to a Funded Social Security System: The Case of Argentina
By Joaquin Cottani & Gustavo Demarco
The Argentine social security system has been modified a number of times since its creation in 1904. The pay-as-you-go system was adopted in 1954. The reform of 1969 established the system’s definitive structure, which remained substantially unchanged for more than twenty years. However, the system’s underlying financial problems led the government to undertake an integral reform of its social security program in 1993. The government adopted a mixed system by introducing private pensions into the program. In this report, former system or old system will refer to the retirement program that existed between 1969 and 1993. The former pay-as-you-go system included a single regime for public- and private-sector employees and a separate regime for the self-employed (whose affiliation to the social security program is mandatory in Argentina). In theory, more than 90 percent of the labor force was insured under these two systems, with exclusions made only for state and local government employees, armed and security forces, and certain professionals with independent retirement systems. However, owing to pervasive evasion, especially among the self-employed, many workers were not eligible for benefits on reaching retirement age.
Fuente: NBER
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