November 12, 2002
SANS ALLENDE:Chile's Unemployment Accounts (Daily Policy Digest, November 12, 2002)
Chile, the first country in the western hemisphere to set up a social security system, and the first country in the world to reform it using individual investment accounts, has again broken new ground by becoming the first country to use individual accounts in an unemployment insurance (UI) system.
The system now being implemented builds on Chile's success with individually-owned retirement accounts:
*Workers will pay 0.6 percent of their wages into individual accounts, while employers will pay a 2.4 percent payroll tax divided between individual accounts and a "joint account."
*The accounts will be administered by the same private pension funds that manage Chilean workers' retirement accounts, and the funds will invest conservatively in a variety of securities.
*The individual account will be in the worker's name and will not be paid out until the worker becomes unemployed or retires.
Whose future looks better, France's or Chile's? Posted by Orrin Judd at November 12, 2002 3:35 PM