Privatizing public pension systems Lessons from Latin America John B. Williamson* Department of Sociology, Boston College, Chestnut Hill, MA 02467, USA Abstract The major goal of this analysis is to examine the pros and cons of privatizing public pension schemes based on the Latin American experience. The study draws on evidence from four countries that have fully privatized their public pension schemes (Chile, Mexico, Bolivia, and El Salvador) and four that have partially privatized (Argentina, Uruguay, Colombia, and Peru). Some evidence suggests that privatization is having positive economic effects, contributing to the development of financial institutions and the availability of investment capital. It may also be increasing national savings rates and the rates of economic growth, but on these issues there is less agreement. The benefits of privatization go primarily to high-wage male workers with few benefits for low-wage and female workers. As a result, privatization contributes to both income and gender inequality. Efforts to draw lessons for the US must take into consideration numerous political and economic differences. D 2001 Elsevier Science Inc. All rights reserved. Keywords: Social security; Privatization; Latin America; Reform; Pension policy 1. Introduction In many countries, both rich and poor, a gap has been opening up between pension fund obligations and pension fund revenues, a gap that is projected to increase dramatically in the decades ahead. There is general agreement among international pension policy analysts that something must be done. At the center of the debate as to what to do are proposals to privatize existing public pension schemes, an approach that is viewed by many as a way to deal with 0890-4065/01/$ – see front matter D 2001 Elsevier Science Inc. All rights reserved. PII:S0890-4065(01)00024-X * Tel.: +1-617-552-8530; fax: +1-617-552-4283. E-mail address: jbw@bc.edu (J.B. Williamson). Journal of Aging Studies 15 (2001) 285 – 302