Academic journal article Social Security Bulletin

Uruguay Sets Up Dual System of Public and Private Pensions

Academic journal article Social Security Bulletin

Uruguay Sets Up Dual System of Public and Private Pensions

Article excerpt

The recent reform of the Uruguayan pension system revamps the existing public program and adds a new private portion that sets up individual retirement accounts. The new dual system will have three levels of coverage:

Public program. For workers earning up to 5,000 pesosabout US$900 per month-the program will be financed by tripartite contributions from the worker, employer, and government. The benefit, payable at age 60 with 35 years of contributions, is equal to revalued average monthly earnings over the last 10 or 20 years, whichever is higher. The current retirement age of 55 for women will be increased gradually to age 60 by 2003.

Mandatory individual savings program. For workers under age 40 who earn between 5,000-15,000 pesos (about US$900-US$2,700) per month, the savings will be financed by employee contributions to an individual account. The retirement pension will be equal to the employee's contributions plus accrued interest. The government guarantees a minimum benefit of 550 pesos (about US$72) as of January 1997.

voluntary savings program. Workers earning more than 15,000 pesos per month may make additional contributions to their accounts. …

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