Pension Reform: Uneven Progress

By Christina Ewig*

Two Women

Nathan Gibbs / Flickr / Creative Commons

Recent pension reforms in Latin America show promise for greater gender equity across the region, but progress remains uneven in coverage and generosity.  Since 2007, 13 countries have either introduced or expanded some form of non-contributory pension, offered to defined groups as a social right, while others have made reforms to their existing pension systems that specifically compensate for gender inequalities.  These reforms in several instances were conceived with the participation of gender equity advocates.

  • The introduction of non-contributory pensions has equalized pension coverage between women and men in the region, according to a comprehensive study by the Organización Iberoamericana de Seguridad Social.
  • The equalization of men’s and women’s retirement age in the Dominican Republic, Mexico, and Uruguay makes it easier for women to attain the minimum number of working years for eligibility for a minimum pension.
  • The use of gender-neutral mortality tables in Bolivia and a return to the state-run defined-benefit system that treats men and women equally in Argentina, are also improvements.
  • More innovatively, in the 2007 expansion of the non-contributory pension in Bolivia and the 2008 reforms of the traditional pension systems in Chile and Uruguay, women were given credit toward their pensions for children born or adopted, to compensate for time out of the labor market.

The need for such reforms is great globally and in Latin America.  Women face much greater risks than men of poverty in old age due to workplace discrimination and gender imbalances in family carework responsibilities – the “motherhood wage gap” – during their working years.  Women are employed in smaller numbers than men in the formal economy, and they are often concentrated in the lower-paid and less-stable informal sector.  Domestic workers, primarily women, are in a sector notorious for employers’ evasion of pension payments.  Women in Latin America are also more likely than men to be found among the ranks of the unemployed or partially employed.  When employed full time in the formal sector, they face a diminishing but still substantial wage gap, earning 17 percent less on average than similarly educated men, according to the Inter-American Development Bank.  While the original pay-as-you-go pension systems were based on a male-breadwinner model that envisioned women as “dependents,” the 1990s push toward pensions that relied entirely on individual earnings magnified the effects of these discriminatory employment contexts and carework imbalances.  Moreover, in the individual capital account model, practices such as the use of differential mortality tables to determine monthly payments further reduced women’s income in old age, due to their greater expected longevity.

Despite the progress toward greater gender equity in pension policy, the issue deserves wider attention because advances have been uneven.  For example, while most countries in the region have adopted some form of non-contributory pensions, the percentage of the population eligible for these varies dramatically – as does the monthly payment.  Moreover, while the gap in pension coverage between men and women has narrowed, the compensation levels remain dramatically unequal.  Reforms, like those of Bolivia, Uruguay and Chile, that build-in compensation for market and carework inequalities deserve wider replication. 

February 26, 2015

*Dr. Ewig is Associate Professor of Gender and Women’s Studies and Political Science at the University of Wisconsin-Madison.  She is the author of Second-Wave Neoliberalism: Gender, Race and Health Sector Reform in Peru.

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