Carmelo Mesa-Lago, Evaluation of Four Decades of Pension Privatization in Latin America, 1980–2020: Promises and Reality. Mexico City: Fundación Friedrich Ebert, 2021. Figures, tables, abbreviations, notes, bibliography, appendixes, 204 pp

Abstract

Professor Mesa-Lago is one of the first authors to highlight the importance of studying the political economy of pension systems, beginning with his book Social Security in Latin America (1978). Later, he was one of the first authors who began to elaborate substantiated criticism of the Chilean experience of individual capitalization (1985). Then (2008) he formalized a structural-type pension reform typology, consisting of a substitute model that closed the public system for a private system of defined contributions (Chile, Bolivia, Mexico, El Salvador, and the Dominican Republic); a mixed model, in which a public system was maintained and private management of funds was incorporated as a second pillar (Argentina, Costa Rica, Uruguay, and Panama); and a parallel model, in which the new private system entered directly into competition with the public pension system (Colombia and Peru). To frame the literature developed by Mesa-Lago more broadly, the study of pensions is relevant because these reforms must deal with financing problems and demands from different actors involved in this area. The solutions to the various demands and limitations caused by problems related to public pension finances are not usually reached in a single reform process. For example, Latin America is a region where old age pensions have been an essential axis for developing welfare regimes or schemes since the 1920s, with a heavy inheritance of fragmentation and segmentation that reproduced labor market inequalities (Cruz-Martínez et al. 2021). The current challenges are characterized by a context of inclusion of the excluded in the form of noncontributory pensions, while contributory schemes experience financing difficulties and worsening future sustainability, due to factors related to the demographic structure of the countries (Arenas de Mesa 2019). In addition, Latin America is experiencing a context of population aging and a consequent increase in the old age dependency rate, which calls into question the fiscal sustainability and equity of the architectures of pension systems. According to ECLAC, the population over 65 years of age doubled (from 3.7 percent to 7.7 percent) between 1965 and 2015, while in numbers, it grew from 9.1 million to 47 million. By 2065, it is estimated that 24.4 percent of the region’s population, equivalent to 183.5 million people, will be 65 years of age or older. Consequently, this Mesa-Lago monograph is a must-read reference for an overview, especially regarding the role of pensions in national strategies for social protection and poverty alleviation, particularly in a post-COVID recovery context. This work aims to evaluate the promises of privatization, considering the principles of Social Security, based on a bibliographic review and in the