Pensions are Latin America’s ticking time bomb

As pointed out by the Inter-American Development Bank (IDB), Latin America is a region aging at a fast and unprecedented pace. Right now, about 11 percent of the region’s population is aged over 60. And while that’s much less than Europe (24 percent) or North America (21 percent), the Latin American rate will be—in just three decades’ time—similar to what we see now in countries such as Germany or Switzerland.

According to data from the U.S. National Institute on Aging, three South American countries—Colombia, Brazil, and Chile—figure among the top 20 fastest-aging nations.

So, how are countries preparing themselves for this new demographic reality?

As signaled by a 2016 report commissioned by Argentinian universities and the IDB, entitled “Social Pensions and Poverty in Latin America,” pension systems’ coverage levels remain very low, with only 29 percent of senior citizens receiving retirement benefits. This explains why senior citizens are so prone to falling into poverty. The study, authored by IDB researcher María Laura Oliveri, points out that 16 percent of Latin Americans over 65 years old are below the poverty line, with another 30 percent being in a situation of “vulnerability.”

In Latin America, many governments have chosen not to tackle the issue, precisely out of fear of social unrest.

Brazil’s pension reform

Under Jair Bolsonaro, Brazil approved a pension reform of its own in October 2019, establishing a minimum retirement age for the first time—62 for women, 65 for men—aiming at...