Courtesy Reuters

POOR PENSION PLANS

By Dorothy Dillon

To the Editor:

Few would doubt that the social security systems of Latin America and Russia need reform. But before getting swept up in Jose Piñera's enthusiasm for privatizing these systems along the lines of the Chilean model, one should note a possible unintended consequence of doing so ("A Chilean Model for Russia," September/October 2000).

According to a study by Chilean economist Alberto Arenas de Mesa and American sociologist Veronica Montecinos, the privately managed pension system in Chile has increased gender inequalities in that country since the program's inception in 1980. Because of the way the system calculates benefits, all the disadvantages that women, particularly poor women, suffer in the labor market directly affect the accumulation of funds in their individual retirement accounts. Thus the privatized system yields lower pensions for women than did the state-run program.

DOROTHY DILLON

Former Director for Latin America, U.S. Information Agency

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