¿How to achieve an universal coverage in Latin America and the Caribbean?
¿Is it fundable? This is the big question that arises when discussing the proposal of achieving an universal pension coverage that protects all citizens when they turn certain age.
The answer given by three specialists (link to bios) from the Inter-American Development Bank in the book Better pensions, better jobs: towards universal coverage in Latin America and the Caribbean (link to pdf) is a resounding yes: universal pension coverage is possible and financeable.
However, to achieve this sustainability is necessary to make a global, integral, transparent and effective reform that should allow the pension system to meet its two functions: to eliminate poverty in old age and to maintain the workers standards of living when they stop working.
¿How? Their proposal is based on two indissoluble pillars.
The creation of an antipoverty universal non-contributory pension
This measure should be integrated with the general pension system, complemented by strong fiscal institutions and reconciled with a change in the rules so that the system forces all workers to save for their retirement, regardless of their occupation.
Firm commitment to formal employment
The pension reform must be part of an increase productivity agenda. Only a market that boost formal employment and attract groups that currently have a low degree of savings can make viable an universal pension coverage, particularly for those with low and middle incomes.