Chile's privatized Social "Security" accounts haven't worked as well as some suggest. True, returns on Chilean private Social Security accounts were high in the 1980s, even after paying huge administrative costs (contrasting sharply with American Social Security administrative costs of only 1% of benefits). But "pension fund returns over the past four years have averaged under 2% before commissions."*
And "as of December 1995 over 35% of the 5.4 million contributors to the (Chilean) private system had accumulated less than $500 in their accounts, while more than half had less than $1228 in their accounts."** The smallness of these accounts suggests that most Chileans are unable or unwilling to trust their retirement future to private Social Security accounts.
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*Stephen J. Kay, Economic Analyst, Latin America Research Group, Federal Reserve Bank of Atlanta, Atlanta,Georgia, Testimony before the House Committee on Ways and Means, Hearing on Social Security Reform Lessons Learned in Other Countries, February 11 1999 (his views as a private citizen).
