The effect of the Covid pension withdrawals and the Universal Guaranteed Pension on the income of the future retirees and its fiscal costs

Carlos Madeira

Latin American Journal of Central Banking (previously Monetaria), 2024, vol. 5, issue 3

Abstract: Chile implemented large pension withdrawals during the pandemic relative to other countries. Afterwards, Chile increased non-contributory benefits in a quasi-universal scheme. Simulating the future pensions, I show that the average loss in contributory pension income is 27.9%, with losses of 23.9% and 31.4% for men and women, respectively. After accounting for public transfers, the average loss in total pension income is just 6.2%, with losses of 7.5% and 5.2% for men and women, respectively. Current retirees lost just 1.1% of their pension income after accounting for the government transfers. The state may end up covering 92% of the total value of the pension withdrawals through the increased transfers.

Keywords: Pension wealth; Covid pandemic; Fiscal costs (search for similar items in EconPapers)
JEL-codes: D14 H55 O54 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:lajcba:v:5:y:2024:i:3:s2666143824000048

DOI: 10.1016/j.latcb.2024.100122

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