2010年-世界发展银行全球_A_Summary_and_Update_of_Developing_Annuities_Markets___The_Experience_of_Chile_45页_788kb

Summary and Update of Developing Annuities Markets: The Experience of Chile

Core Content

This working paper provides a detailed summary and update of the development of the annuities market in Chile, focusing on the changes introduced in 2008. It is part of a broader World Bank initiative to study pension systems and retirement product markets, particularly in countries with defined-contribution (DC) pension systems.

Main Findings

Chile's Pension System Overview

• Chile's retirement market originated from the 1981 pension reform, which replaced the public pay-as-you-go (PAYG) system with a private, fully-funded (FF) system based on DC principles.
• Workers contribute 10% of their wages to an individual account, with an additional 2.2% to cover disability and survivorship insurance, as well as operating costs and profits of pension fund administrators (AFPs).
• By 2008, 4.57 million workers were active contributors, representing about 63% of the labor force.
• The number of pensioners under the new system increased to 693,929 in 2008, or 46.6% of total pensioners.

Retirement Product Market Structure

• The market is competitive and decentralized, with AFPs and life insurance companies authorized to offer retirement products.
• The annuity market is more competitive than the AFP market, with a larger number of participants and lower concentration ratios.
• The 2008 reforms significantly impacted the market structure and regulations, reducing the influence of early retirement incentives and strengthening the demand for annuities at normal retirement.

Annuity Market Development

• Annuity market has experienced high growth due to restrictions on lump-sum withdrawals, the availability of inflation-protected annuities, and robust prudential regulation.
• The annuity market has evolved from a highly concentrated structure in the 1980s to a more competitive one by the early 2000s.
• The 2008 amendments to the pension law aimed at improving the solidarity pillar and increasing coverage for self-employed workers.

Government Guarantees

• The government provides four types of guarantees: minimum relative return, disability and death coverage, solidarity pension pillar, and annuity provider bankruptcy protection.
• The solidarity pension pillar includes a Basic Solidarity Pension (PBS) and a Pension Solidarity Supplement (APS), both designed to support low-income retirees.
• The PBS is paid to all elderly individuals without their own pension, while the APS is provided to those in the lowest 3 quintiles of income distribution with a private pension.
• The 2008 reforms introduced a more inclusive coverage for the solidarity pillar, with the PBS initially covering 40% of the poorest individuals and expanding to 60% by 2011.
• The government guarantees 100% of annuities up to the PBS and 75% of the amount above this level, up to a maximum of 45 UFs per month.

Performance of Retirement Products

• The demand for annuities has been driven by restrictions on lump-sum withdrawals and the availability of inflation-protected options.
• Phased withdrawals (PWs) and annuities are both available, with PWs being more popular among early retirees.
• The performance of annuities is assessed through money's worth ratios (MWRs), which have generally been favorable compared to other OECD countries.
• The MWRs have improved over time due to better regulation and market development.

Regulation and Supervision

• Prudential regulation and supervision of AFPs and insurance companies have been crucial in maintaining market stability and ensuring consumer protection.
• The 2008 reforms strengthened the prudential framework and improved the sustainability of MWRs.
• The insurance sector has grown significantly, with total insurance premiums reaching 4.5% of GDP in 2008.
• Insurance assets have grown from 5% of GDP in the mid-1980s to 20% in 2003, and remain at similar levels since then.

Market Concentration and Competition

• The AFP market became highly concentrated in the 1990s, with the number of AFPs decreasing from 20 to 6 by 2008.
• The annuity market, in contrast, remained more competitive, with a larger number of participants and lower concentration ratios.
• The 2008 reforms contributed to the stabilization of marketing costs and the continued growth of the annuity market.

Key Information

• High Annuitization Rate: Chile has one of the highest annuitization rates globally, attributed to restrictions on lump-sum withdrawals, inflation-protected annuities, and robust regulation.
• Government Guarantees: The introduction of the solidarity pension pillar in 2008 significantly improved coverage and benefits for low-income retirees.
• Market Structure: The pension and insurance markets are structured in a competitive and decentralized manner, with AFPs and life insurance companies playing key roles.
• Regulatory Impact: The 2008 reforms had a significant effect on the market, reducing the impact of early retirement incentives and strengthening the annuity market at normal retirement.
• Future Outlook: The Chilean retirement product market is expected to continue growing as the second pillar pension system matures and more workers retire.

Conclusion

The development of the Chilean annuities market is a result of a combination of factors including pension reform, regulatory frameworks, government guarantees, and market dynamics. The 2008 reforms have further solidified the structure and performance of the market, making it more sustainable and inclusive. The experience of Chile offers valuable insights for other countries undergoing similar pension reforms.