Pension Reform: Lessons from Latin America

There are benefits from Latin American pension reform, but they have been overestimated. The approaches taken in second-generation reforms and their still early results hold lessons for OECD and non-OECD countries alike. A partial shift to funding is feasible and can be financed in different ways; partial funding of pensions can lead to greater risk diversification. High administrative costs and uniformity of investment portfolios make the new systems inefficient; pension regulation has to be designed and implemented to lessen these negative effects. [author]