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Demographic Changes in Latin America: The Good, the Bad and …
Author:
Mr. Santiago Acosta Ormaechea
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Marco A Espinosa-Vega null

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Diego Wachs
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Series:
IMF Working Papers
Volume/Issue:
Volume 2017: Issue 094
Language:
English
Publication Date:
13 Apr 2017
DOI:
https://doi.org/10.5089/9781475594775.001
ISBN:
9781475594775
ISSN:
1018-5941
Pages:
48
Keywords:
WP; inflation rate; defined contribution; DC system; replacement rate; DB system; pension system; public pension spending; public healthcare spending; aging; pension system reforms; contribution rate; cash flow; Pension spending; Pensions; Retirement; Western Hemisphere
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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The paper develops a simple, integrated methodology to project public pension cash flows and healthcare spending over the long term. We illustrate its features by applying it to the LAC5 (Argentina, Brazil, Chile, Colombia and Mexico), where public spending pressures are expected to increase significantly over 2015-50 due to demographic trends and rising healthcare costs. We simulate alternative pension reforms, including the transition from a defined benefit to a defined contribution pension system and the fiscal burden of a minimum guaranteed pension under the latter. We also analyze public healthcare outlays in the LAC5, which is likewise expected to increase significantly over 2015-50 due to aging and the so-called excess cost growth factor of healthcare services, showing that curbing the evolution of the latter (e.g., through enhanced competition in the healthcare sector) could aid in containing spending pressures. Despite its simplicity, the methodology yields projections that compare well with other approaches. It therefore provides a good benchmark for assessing alternative reform scenarios, particularly in data-constrained countries.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund