Pension coverage in Latin America: trends and determinants

Social security systems coverage in Latin America has become a central issue in the policy debate, not only in most of the countries in the region, but also around the world. This document presents an analysis of pension coverage trends in Latin America, using empirical data from 18 Latin American countries.

Findings are as follows:

• the coverage among the active workers is still quite low in most countries, since it is lower than 30% in 8 of the 18 countries
• while the improvement observed in recent years is encouraging, rates are far from levels that could be considered acceptable in most cases
• coverage problems are greater among workers of the primary sector and the smaller firms, where the coverage is almost nonexistent, with some exceptions
• women usually have lower coverage rates than men, especially among the elderly; the cause of this gender bias seems due to differences in the labour force participation rates in the past
• nevertheless, coverage is better among the workers of the public sector, although the indicators show that coverage rates are far from 100% in most countries, pointing that compliance problems also affect the public sector
• coverage of contributory schemes is very low in most countries in the region, affecting more those living in rural areas, the poor and the less educated

The authors conclude that an important effort will be needed in most countries in the region, mainly in terms of reduction of evasion and non?registration among salaried workers, and incorporation into the system of the self?employed workers. On the other hand, they indicate that the analysis can be improved and expanded in the future by including the collection of new information on adequacy and sustainability of the systems.