Social Security Reform on Women in Three Countries
November 4, 2003
The impact of individual accounts on women is likely to surface as an important issue in the debate over Social Security reform in the United States. The experience of Chile, Argentina and Mexico, which have adopted systems in which social security benefits are primarily financed by mandatory savings in individual accounts, sheds light on how women will be affected and which features are likely to be effective.
According to an NCPA study comparing the relative position of men and women under the new and old systems and the new-system benefits of women with differing educational levels and labor market experience, in general:
- Women have generally gained under the new systems, relative to men.
- Women in the lowest educational categories are the biggest gainers.
- In Chile and Mexico women who have worked a full career gain the most, but in Argentina women who spent much of their time working in the home receive the largest rates of return on their contributions.
The most important features of the new systems for women are personal accounts whose benefits they own, joint pensions from their husbands that they are entitled to receive in addition to their own pensions, and public benefits targeted toward low earners.
Generally, in these three countries, personal accounts are projected to provide monthly benefits that are 30 to 40 percent of men's for "average" women -- who work in the formal labor market about half their adult lives and retire early. However, women who work full careers and retire at the same age as men receive pensions from personal accounts that are 60 to 70 percent those of comparable men. And joint pensions raise the lifetime benefits of married women with full work careers to levels equal to or higher than the benefits of men.
Source: Estelle James, Alejandra Cox Edwards and Rebeca Wong, "The Impact of Social Security Reform on Women in Three Countries," Policy Report No. 264, November 2003, National Center for Policy Analysis.
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