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EM LATAM CREDIT: Goldman Sachs Highlights Fiscal Cost of Chile’s Pension Reform

EM LATAM CREDIT
Bullet
  • "The fiscal cost of Chile pension fund reform “is not small” as it raises the universal pensions supplied by the state at the same time that it boosts savings in individual accounts, Goldman analysts wrote in a note Tuesday.
  • Finance Ministry has said the reform will have a fiscal impact of around 1% of GDP once fully effective
  • The changes include higher employer contributions, the higher universal pension, contributions to a revamped social security system, additional institutional costs, as well as lower revenues associated with the higher labor costs for businesses
    However, Goldman still views the reform as positive because it will lead to an increase in domestic savings and in the medium term will improve the depth of the domestic capital market" - BBG
    CHILE 5.65% 2037, $99.70, -.27
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  • "The fiscal cost of Chile pension fund reform “is not small” as it raises the universal pensions supplied by the state at the same time that it boosts savings in individual accounts, Goldman analysts wrote in a note Tuesday.
  • Finance Ministry has said the reform will have a fiscal impact of around 1% of GDP once fully effective
  • The changes include higher employer contributions, the higher universal pension, contributions to a revamped social security system, additional institutional costs, as well as lower revenues associated with the higher labor costs for businesses
    However, Goldman still views the reform as positive because it will lead to an increase in domestic savings and in the medium term will improve the depth of the domestic capital market" - BBG
    CHILE 5.65% 2037, $99.70, -.27