Welfare, Inequality and Financial Consequences of a Multi-pillar Pension System

The distributional impact of the structural pension reform in Latin American
countries has been largely absent in the economic debate. However, this reform may
widen inequality in old-age and reduce welfare. In this paper we study the
consequences of implementing a multi-pillar system in one of these countries. We take
advantage of available administrative records for Peruvian workers to estimate
inequality in pensions, pension debt and welfare. Overall, our results show that the
pension debt and inequality can be substantially reduced without welfare losses.