Greece and Argentina both introduced radical pension reforms following the financial crisis. Drawing on recent research, Marina Angelaki and Leandro Carrera argue that while both countries lacked access to international financial markets and had unsustainable pension systems, the reforms have been short-sighted, ultimately undermining the adequacy and sustainability of pensions. A future overhaul of their systems looks unavoidable.

Latin American countries have shared with those of southern Europe a common policy legacy of Bismarckian welfare states where benefits are related to working-age earnings. In the pension field, both Argentina and Greece introduced occupational-based schemes at the beginning of the twentieth century. Yet, in the 1990s they took different paths in their attempt to put their public finances in order: Argentina adopted a structural reform entailing the introduction of a private pillar on top of its public ‘pay as you go’ system, whereas reforms of the Greek (monopillar) system were limited to cost-containment and revenue raising measures.

Despite the different reform paths, on the eve of the 2008 crisis both systems were faced with significant sustainability and adequacy challenges. In the case of Argentina, approximately half of the system’s revenues came from ad hoc taxes and government transfers, while a significant number of workers had an insufficient number of contribution years to qualify for a full pension from the public pillar and low levels of savings in the private pillar, leading to an inadequate level of income retirement. For example, it was estimated that in 2002, 30 per cent of the elderly living in rural areas were below the poverty line. In the case of Greece, despite pension expenditure being close to the EU-average, the risk of poverty for those over 65 years old stood in 2009 at 21.4 per cent. Furthermore, pension expenditure was projected to increase from 12.4 per cent of GDP in 2009 to 24.1 by 2060 according to EU projections.

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