In Bolivia, the current system of individual accounts replaced the public pay-as-you-go system in 1997. Under the current system, all salaried workers (including armed forces personnel) are covered by the system, while participation for the self-employed is voluntary. Account holders are required to contribute 10% of earnings per month to an individual account, while employers may make voluntary contributions on behalf of employees.
On December 10, 2010 a new pension law entered into force, lowering the retirement age and nationalizing the system of individual accounts. The new provisions, to be implemented in 2011, include:
Lowering the retirement age from 65 to 58 for both men and women and to even younger ages for mothers and miners.Mothers will be able to retire 1 year earlier for each child up to a maximum of 3 children. Miners will be allowed to retire at age 56 or younger, with a reduction of 1 year for every 2 years worked in the interior of a mine, up to a maximum reduction of 5 years.
Transferring management of the system’s two pension funds to a newly created government agency, the Long-Term Social Security Manager.Currently, two foreign companies manage some 34 billion bolivianos (approximately US$ 5 billion) for about 1.3 million workers. Workers will continue to pay a monthly administrative fee of 0.5% of earnings.
Setting up a solidarity benefit for those workers who do not qualify for a guaranteed minimum benefit (180 months of contributions), but have at least 10 years of contributions.A solidarity fund will subsidize these benefits. The fund will be financed by contributions from workers (0.5% of earnings), employers (3% of payroll), and an additional contribution from workers earning more than 13,000 bolivianos (approximately US$ 1,900) per month (the amount of the additional contribution is not yet specified).
Sources:"Aprobada Ley de Pensiones en Bolivia, la Cual Baja la Edad Jubilatoria a 58," Agence France Press, December 3, 2010; "Bolivia Nacionaliza Pensiones y Baja Edad de Jubilación," AP Spanish Worldstream, el 3 de diciembre de 2010; "Bolivia Cuts Retirement Age, Nationalizes Pensions," Bloomberg Business Week, December 3, 2010; "Gobierno Amenaza a AFP Con Ejecutar Garantías," La Razón, el 4 de diciembre de 2010; "Bolivia Estrena Una Nueva Ley de Pensiones," La Razón, el 10 de diciembre de 2010.