Abstract

DE MELO, Gioia et al. Eligibility for retirement and replacement rates in the Uruguayan multi-pillar pension system. Desarro. soc. [online]. 2019, n.83, pp.105-144. ISSN 0120-3584.  https://doi.org/10.13043/dys.83.3.

We project the levels of eligibility and gross replacement rates of the pay-as-you-go and individual capitalization pillars in Uruguay. Based on a random sample of worker administrative records, we estimate years of contributions, formal income, and the evolution of the individual savings fund. Our results suggest that while 51% would be eligible for retirement at age 60, 28% would not be able to retire from the contributory system even at age seventy. We expect that 34% of those retiring at age 60 will receive a minimum pension while the replacement rate is estimated to be 52% relative to the previous year’s wage. We conclude that Uruguay still faces challenges regarding indivi­duals’ density of contributions and amounts declared as both reduce eligibility levels and impose financial pressure on the pay-as-you-go pillar.

Keywords : Informality; pay-as-you-go; individual savings; minimum pension; Uruguay.

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