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Chile's Experience with the Privatization of Social Security

In 1981, Chile replaced its public defined benefit social insurance system with a private mandatory defined contribution scheme, a radical reformation that a number of other countries - faced with problems similar to those that led to reform in Chile - have considered adopting. Some observers in the United States have even recommended privatizing the U.S. Old-Age, Survivors Insurance and Disability Insurance (OASDI) program. In this AARP Public Policy Institute Issue Brief, Sara E. Rix highlights the factors leading to the reform in Chile, describes the features of the new system, and discusses the advantages and disadvantages of the reform for Chile and future Chilean retirees. (8 pages)