What Can We Learn from Pension Reforms in Latin America and Southern Europe?

This blog post is based on an article published in the Journal of International and Comparative Social Policy by Marina Angelaki and Leandro Nicolas Carrera.

In response to demographic pressures associated with population ageing, countries around the world have embarked since the 1980s – and more intensely since the 1990s – on reforms of their public pension systems. Reforms have ranged from increases in the retirement age and changes to the calculation of pension benefits, to more radical measures that shift responsibility from the state to the market, or combine both approaches. While the economic case for pension reform may be clear, implementing such reforms is never an easy task. This is due to the vested interests of different societal actors and hence the need for negotiation to achieve policy change that endures over time and is not reversed by successive governments. Therefore, comparative analyses of pension reform may provide useful insights for scholars and practitioners alike in respect of what factors are usually at play and how to propose reforms that are feasible to implement and last.

Why Pension Reform Paths Diverge

Cross-regional analyses of pension reforms in Latin America and Southern Europe can be a useful strategy to find out more about what works (and what doesn’t) when approaching reforms given that countries in these two regions share some commonalities in the way they initially organised their pension systems. By the mid-20^th century, they had both developed generous public pension systems based on the pay-as-you-go principle, under which pension benefits are financed by contributions from current workers. Yet since the 1980s their reform paths in response to demographic pressures and fiscal imbalances have differed. Latin American countries opted for full or partial privatisation of the systems, thus shifting responsibility to the individual, while Southern European countries chose a less radical path entailing measures to reform their public pension system by strengthening the link between contributions and benefits and enhancing the introduction of supplementary private pensions.

Our article focuses on pension reforms implemented since the 1990s in Chile, Argentina and Uruguay in Latin America and Spain, Italy and Greece in Southern Europe. We follow a most-similar-systems (MSS) research design, selecting cases that are broadly similar in how their pension systems were organised, the role of societal actors, and patterns of mismanagement over time, but that vary in their reform outcomes.  

We distinguish between path-departing (paradigmatic) and parametric reforms. The former entail a change in the goals of the system such as the introduction or elimination of a dominant pillar (one that provides most of the retirement income) or a change in the funding principle thereby affecting the degree of solidarity and individualisation of the system. Parametric reforms are further divided into major and minor types. Major parametric reforms expand the role of the dominant pillar or add a complementary (non-contributory one) while minor parametric reforms are generally limited to changes in the retirement age or the number of years of contributions to qualify for a pension.

In understanding reform pathways, the literature on pension reform has highlighted the significant role of institutions and policy legacies in the reform process. Thus, we focus on their role by examining in particular the level of support for the executive in the legislature and the role of societal actors with an interest in pension reform such as trade unions, grassroots movements and the pension industry.  

Institutions, Legacies and Reform Outcomes

Our analysis has confirmed our hypothesis that significant path-departing reforms are possible when a strong institutional setting is combined with a weak policy legacy as we have witnessed in the case of Italy in the early 1990s or Greece during the economic crisis (2010–2012). Yet, our analysis has shown that significant reforms have also occurred where strong institutions coexist with strong policy legacies, as in Argentina in 1994 and 2008, where support from the labour movement helped advance reforms that served its own interests. This finding provides an interesting point in considering the role of veto actors not just in terms of their ability to block reforms, but also in furthering their interests.

Major parametric reforms have taken place when a weak institutional setting has met strong societal actors, thereby leading governments to negotiate or make concessions. Typical examples are the Chilean reforms (2008 and 2025), the 2023 reform in Uruguay and the Spanish one in 2021/23. This confirms arguments regarding how cooperative institutions and broader coalitions can help to overcome the stalemate. On the contrary, minor parametric reforms (as in the case of Uruguay in 2008) are the result of the combination of strong institutions meeting with strong legacies.

The cross-regional analysis has confirmed that pension reforms are less the result of ideology and more of governments’ ability to negotiate and consider the role of different actors. Economic crises have given not only centre-right (as in Argentina in 1994) but also centre-left governments (as in Uruguay in 1995) more leeway to implement significant reforms. More interestingly, our analysis seems to show that unlike previous research that seemed to imply an irreversible path towards neoliberal retrenchment, the picture is more mixed.

Implications for Equity and Gender Outcomes

A key implication of these reform trajectories is the growing reliance on funded schemes and longer contribution periods to secure adequate retirement income. As workers increasingly rely on private individual accounts and on state pensions calculated over longer contribution periods, care credits to compensate for career breaks due to child-rearing or elder care—still mostly undertaken by women—will play a key role in the future. In fact, our research shows how provision has already been made in the most recent Chilean, Uruguayan and Spanish pension reforms. The introduction of non-contributory pensions, along with increases in low pensions, is a further element that may contribute to closing the gender pension gap and enhancing gender equality in later life.

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Reference

Angelaki, Marina, and Leandro Nicolas Carrera. 2025. “Comparative Pension Reform Pathways in Latin America and Southern Europe: A Tale of Successes, Failures, and Future Challenges.” Journal of International and Comparative Social Policy 41(1): 49–62. doi: 10.1017/ics.2025.10062.

About the Authors

Marina Angelaki is Assistant Professor in Social Security Policies at the University of the Peloponnese, Tripoli, Greece.

Leandro Nicolas Carrera is a Researcher in Pensions Policy, London School of Economics and Political Science, U.K.