Book Description

Some sort of social security program exists in almost all developing countries. This paper attempts to examine the savings mobilization potential of the social security system in Chile, tracing its development from its beginnings as a funded system to its maturity. This case study is used to explain the seemingly inevitable transformation of the systems' financial basis from a trust fund to a pay-as-you-go arrangement, in which there is no generation of surpluses and hence, no savings mobilization. In addition to the presentation of the Chilean system, the paper includes a review of the literature on social security and savings, a general survey of social security systems, a discussion of what exactly is meant by social security, and the experiences of some typical Asian systems generally regarded as success stories from the point of view of their continued financial viability and their adjunct performance in the field of national savings mobilization. It suggests that, in the course of maturation, tensions between financial viability and success in the redistributive arena are inevitable, and that a social security scheme is not financially viable and must ultimately be financed from general revenues.