Effects of COVID‐19 early release of pension funds: The case of Chile
Journal of Risk & Insurance, 2021, vol. 88, issue 4, 903-936
Amid the extraordinary economic effects of COVID‐19, some policymakers have turned to retirement accounts to support individuals in financial hardship. Given the haste, the long‐term impacts and their heterogeneity have scarcely been analyzed. Using Monte Carlo simulations on the Chilean Social Protection Survey linked with administrative data, this study quantifies the effects of a 10% early release of pension funds. Each withdrawn dollar brings losses of 1.59 dollars in future retirement savings, reducing monthly pension benefits by 7.26%. This policy raises income inadequacy and inequality in retirement, increasing government expenditure by 4.33% to counteract these effects for 65‐year‐old retirees. We propose four policies to mitigate these effects and address the current challenges of most defined contribution pension schemes. Increasing contributions combined with an intragenerational solidarity component shows the biggest impacts. Contribution enforcement, reducing tax evasion, and delaying retirement by at least 1 year via incentives have lower but significant effects.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bla:jrinsu:v:88:y:2021:i:4:p:903-936
Ordering information: This journal article can be ordered from
Access Statistics for this article
Journal of Risk & Insurance is currently edited by Joan T. Schmit
More articles in Journal of Risk & Insurance from The American Risk and Insurance Association Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().