Basic Old‐Age Protection in Latin America: Noncontributory Pensions, Coverage Expansion Strategies, and Aging Patterns across Countries

Abstract

HISTORICALLY, LATIN AMERICAN pension systems were designed following a social insurance model geared toward offering pension benefits to formal-sector workers.From 1981, and especially over the 1990s, several countries implemented structural pension reforms to introduce privately administered individual accounts that more closely linked individual benefits to past contributions (Mesa-Lago 2004).By design, these systems excluded the redistribution of pension resources among workers and pensioners, promoting individual savings instead.In several countries, the contribution records required to receive a minimum pension from the social security system left ineligible most informal-sector workers, as well as agricultural-sector workers and unpaid family workers.As a result, the reformed pension systems suffered from persistently low levels of coverage, and a large share of older adults had no access to a pension.In more recent years, in a context of economic growth and changing ideas and political balances, several Latin American countries have implemented policies to extend economic protection to older adults who could not obtain a pension in the contributory system.Some countries reformed pension systems that had been privatized in the previous decade (including cases of reform reversals, as in Argentina).Many countries also promoted the expansion of noncontributory pensions for older adults and persons with disabilities or made access to contributory pensions more flexible for some types of workers (Arza 2013;Arza and Knox-Vydmanov 2017;Bosch, Melguizo, and Pagés 2013;Palacios and Knox-Vydmanov 2014; Rofman, Apella, and Vezza 2013).These policies were part of a wider process of welfare expansion in other areas of social protection, which involved greater social expenditures and more social assistance benefits (Barrientos 2011).This article evaluates the patterns of old-age protection in Latin America after recent expansions of basic pension coverage.It characterizes

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