(Photo: Jorge Saenz/AP)
Poorly designed efforts to improve Chile's retirement system could break the country's individual annuity market, economists warn.
The economists — Gastón Illanes of Northwestern University and Manisha Padi at the University of California at Berkeley — look in a new working paper at efforts to replace Chile's current system, which simply limits drawdown of retirement assets, with mandatory partial annuitization.
A working paper is a research paper that has not yet been through a full, formal peer review process.
Under the current rules, the economists write, about 60% of eligible retirees buy private annuities, and the prices for the annuities are low.
