Better Pension Institutions for a Post-COVID-19 World in Latin America and the Caribbean: The Role of Pension Advisory Councils

An important pending issue in the pension systems in Latin America and the Caribbean is that they lack an institutional framework that facilitates their timely adaptation to the demographic change that is coming and to the potential social and fiscal tensions that this can generate. This limitation causes governments to adjust the system occasionally and delay the necessary reforms, typically at a time when technical options are very limited and action must be almost immediate. The pressure for short-term results can also imply significant sacrifices for the affected generations. This is in part because the political economy of social security reforms is very complex. In the absence of adjustment rules and institutions that timely review the fundamental parameters of pension systems, pension reforms are often triggered by fiscal or social crises. The crisis generated by COVID-19 also exposed the weaknesses of the social security systems in Latin America and the Caribbean. In the region, some countries have already made efforts to strengthen their institutional framework in order to face impacts of different natures, such as Chile and El Salvador. This document presents a review of eight case studies representative of international experience in the design, responsibilities and functioning of pension advisory councils.