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Political risk and pension privatization: The case of Argentina (1994‐2008)
Author(s) -
Kay Stephen J.
Publication year - 2009
Publication title -
international social security review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.349
H-Index - 28
eISSN - 1468-246X
pISSN - 0020-871X
DOI - 10.1111/j.1468-246x.2009.01335.x
Subject(s) - pension , private pension , politics , political risk , latin americans , pension system , economics , investment (military) , private sector , business , economic policy , political science , finance , economic growth , law
Proponents of pension privatization in Latin America argued that systems of private fully pre‐funded defined‐contribution individual accounts would be better insulated from politics than was the case with public pay‐as‐you‐go pension systems. However as the Argentinean case demonstrates, most recently with the 2008 nationalization of its private individual accounts system, transferring pension management and investment to the private sector does not necessarily reduce or eliminate political risk. In fact, the implementation of systems of individual accounts creates a new set of political risks, in part because they are a potential financial resource for governments, especially during times of economic stress. This article describes the range of political risks inherent to individual account pension systems, with specific reference to Argentina's 1994‐2008 experience with privatization.