Path departure in a mature pension system: The case of Argentina

ARZA, CAMILA

Sigtuna

Conferencia; International Research Seminar ?Issues in Social Security?; 2010

Foundation for International Studies of Social Security (FISS)

The Argentine pension system has been structurally reformed two times within 14 years. In 1994, the existing public and pay as you go system was replaced for a mixed model including individual funded accounts administered by private pension fund companies. In 2008, however, that system was abandoned and pension policy returned to a unified public defined-benefit model. Going somewhat counter the predictions of the most influential literature on policy reform around the world, which stresses on the path-dependent nature of social security and the political constrains for reform, Argentine politicians have been able to structurally change the pension system twice over the past two decades. These two very different processes privatization and nationalization provide an interesting case for the assessment of the conditions under which structural reforms can be applied in welfare systems. Drawing from recent literature this paper argues that both external shocks and internal dynamics (which include performance expectations and perceptions) are relevant to generate a better context for change. While the reasons behind the pursuit of path breaking reforms may be others (linked to political strategy) these factors reduce the status quo bias and facilitates the legitimization of alternative routes proposed by path breaking change.