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Eligibility for retirement and replacement rates in the Uruguayan multi-pillar pension system (Elegibilidad para el retiro y tasas de reemplazo en el sistema previsional multi-pilar en Uruguay)

Gioia de Melo, Nicolás Castiñeiras (), Analía Ardente (), Oriana Montti (), Braulio Zelko () and Federico Araya ()

Revista Desarrollo y Sociedad, 2019, vol. 83, issue 3, 105-144

Abstract: We project the levels of eligibility and gross replacement rates of the pay-as-you-go and individual capitalization pillars in Uruguay. Based on a random sample of worker administrative records, we estimate years of contributions, formal income, and the evolution of the individual savings fund. Our results suggest that while 51% would be eligible for retirement at age 60, 28% would not be able to retire from the contributory system even at age seventy. We expect that 34% of those retiring at age 60 will receive a minimum pension while the replacement rate is estimated to be 52% relative to the previous year’s wage. We conclude that Uruguay still faces challenges regarding individuals’ density of contributions and amounts declared as both reduce eligibility levels and impose financial pressure on the pay-as-you-go pillar.

Keywords: Informality; pay-as-you-go; individual savings; minimum pension; Uruguay (search for similar items in EconPapers)
JEL-codes: H55 J26 J46 (search for similar items in EconPapers)
Date: 2019
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