The Actuary in the Incoming Social Security Reforms in Latin America

Many Latin American countries are affected by unemployment problems, low economic growth and financing problems of their social security regimes, and at the same time with strong claims regarding access to retirement benefits and the level of replacement rates. This affects both defined benefit regimes and defined contribution regimes and the so-called mixed regimes with solidarity components and / or minimum benefits. And the problem also includes the health benefits of these beneficiaries.

The issue of social security becomes a large concern on the risk for fiscal balance and the governance of these countries. The so-called contingent liabilities of social security are commitments that may not necessarily be fulfilled in accordance with the conditions of resources and benefits currently in force.

The Actuary's role in this process is not limited to Actuarial Valuation, in the strict sense, but to participation in work teams that can approach the different interested parties in order to achieve consensus on the current situation and their perspectives on the medium and long term, and the needs for social security reforms both in terms of resources and benefits, including in macroeconomic terms the reallocation of budget items.

To the demographic problems related to the increase in life expectancy and the sharp decline in the birth rate, biometric and economic aspects of COVID-19 are added, and the low returns of the capital markets in those financial instruments or securities, traditionally authorized for social security institutions, and other related entities such as insurance and banking entities.

Thus, the objective of this presentation is to characterize the social security regimes in force in Latin America, their analysis in accordance with generally accepted actuarial methodologies and within a framework of professionalism in accordance with the ISAP-2, and from there, to present the role of the actuary within the processes of disclosure, awareness, and negotiation of reforms of social security regimes.

On these last aspects, there is direct actuarial professional experience in Latin American countries such as Argentina, Bolivia, Costa Rica, Chile, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Dominican Republic, through consultancies.