The long term impact of Chilean policy reforms on savings and pensions

Abstract

Using a combination of survey data plus the demographic and life expectancy projections for Chile I simulate how different policies may impact the workers’ pensions and voluntary savings. I find that households dissave from their public pension benefits, but not from their contributory pensions, therefore policy increases of contributions are not crowded-out by private decisions. The results show that an increase of the contribution rate plus a delay of the retirement age is necessary to achieve high replacement ratios until 2055. Boosting the education of younger generations and incentives for female employment is efficient for increasing pensions among the poorest households.