Show simple item record

dc.contributor.authorJames, Estelle
dc.contributor.authorIglesias Palau, Augusto
dc.date.accessioned2007-02-14T19:46:40Z
dc.date.available2007-02-14T19:46:40Z
dc.date.issued2006-02
dc.identifier.urihttps://hdl.handle.net/2027.42/49429
dc.description.abstractChile offers an innovative approach to disability insurance within a multi-pillar social security system. The individual’s retirement savings account is used as part of his disability insurance, but if he becomes disabled the account is topped up enough to finance a defined benefit annuity that pays 70% of the reference wage. This is accomplished primarily through the private insurance market, but with government providing regulations and back-up guarantees. The private pension funds and insurance companies that participate in the assessment process have a pecuniary interest in keeping costs low, unlike most public systems that are run by agencies without a personal incentive to contain costs. The individual accounts, used for old age retirement savings, help to finance the disability and survivors’ insurance as a joint product. This further keeps costs down and makes the system less sensitive to demographic shocks than a public pay-as-you-go system would be. However, pre-funding a defined benefit makes system costs much more sensitive to interest rate shifts. The defined benefit reduces risk to the worker but non-differentiated pricing creates cross-subsidies and, in a competitive market, incentives for creaming. Some of the cost reductions to the private insurance may imply a larger future public obligation, due to the minimum pension guarantee. This study examines the potential successes and pitfalls of this mixed public-private funded system of disability insurance and evaluates whether it provides a useful model for the US and other countries.en
dc.description.sponsorshipSocial Security Administrationen
dc.format.extent227232 bytes
dc.format.mimetypeapplication/pdf
dc.language.isoen_USen
dc.publisherMichigan Retirement Research Center, University of Michigan, P.O. Box 1248, Ann Arbor, MI 48104en
dc.relation.ispartofseriesWP 2006-111en
dc.titleHow to Integrate Disability Benefits into a System with Individual Accounts: The Chilean Model.en
dc.typeWorking Paperen
dc.subject.hlbsecondlevelPopulation and Demography
dc.subject.hlbtoplevelSocial Sciences
dc.contributor.affiliationumUniversity of Michigan Retirement Research Centeren
dc.contributor.affiliationumInstitute for Social Researchen
dc.contributor.affiliationotherUrban Instituteen
dc.contributor.affiliationumcampusAnn Arboren
dc.description.bitstreamurlhttp://deepblue.lib.umich.edu/bitstream/2027.42/49429/1/wp111.pdfen_US
dc.owningcollnameRetirement Research Center, Michigan (MRRC)


Files in this item

Show simple item record