Distributional impacts of pension policy in Argentina: Winners and losers within and across generations

ARZA, CAMILA

INTERNATIONAL SOCIAL SECURITY REVIEW (PRINT)

Wiley

Año: 2006

0020-871X

The paper deals with the lifecycle intra- andinter-generational income transfers operated by the pension system in Argentina byestimating the internal rates of return obtained by different generations andtypes of workers from their participation in the pension system. The empiricalanalysis confirms that earlier generations of workers benefited from highersocial security returns than later generations, which retired under a maturedsystem with large deficits. The worst affected cohorts were those born after1920, which particularly suffered from social security crisis and falling realwages. For future generations retiring fully under the new mixed pension system,returns will more closely depend on financial market performance and theevolution of administration costs. Intra-generational transfers were alsoobserved for all cohorts under study, as a result of original system design aswell as from adjustments adopted during the implementation process. The real distributionalimpact of progressive benefit formulas could however be offset by statetransfers to cover pension deficits and forward tax shifting in a context of unequalpension coverage.