Raising the retirement age? This has been a long-standing discussion around the world. The lengthening of life expectancy plus the aging of the population -which, in pay-as-you-go and mixed systems, puts a lot of pressure on fiscal spending, given the decrease in contributions.The lengthening of life expectancy plus the aging of the population -which, in pay-as-you-go and mixed systems, puts a lot of pressure on fiscal spending, given the decrease in contributions from the young working population to finance the pensions of a growing population of retired people- are two of the main reasons behind the debate on retirement age.are two of the main reasons behind the debate.. Even in the case of the individually funded system in place so far in Chile, the need to contribute more years to have a better pension is an important element in the public discussion.

However, things do not appear to be that simple. An analysis by the World Economic Forum finds some hidden costs in the idea of postponing the retirement age. From the point of view of fiscal sustainability, the idea of retiring later makes a lot of sense. But when looking at the efficiency of welfare distribution, among other things because it tends to spread benefits to populations that need them less: those who retire later generally belong to groups with better health and education, more productive careers and more financial resources, while those who tend to retire earlier have shorter life expectancies. "Therefore, steeper incentives take resources away from people who not only have fewer resources, but also suffer from poorer health," says the analysis.

With this work, which seeks to show the redistributive costs of raising the retirement age, WEF proposes new elements to the analysis to find the difficult balance between providing better pensions to those who need them most, WEF proposes new elements to the analysis to find the difficult balance between providing better pensions to those who need them most, which tends to be those who retire earlier, versus the need to maintain sustainable fiscal spending.The paper seeks to show the redistributive costs of raising the retirement age, which tends to be those who retire earlier, versus the need to maintain sustainable fiscal spending.

Although the WEF's analysis is not aimed at a system with a majority individually funded component such as the one that characterizes the Chilean pension model to date, it does provide important elements for the discussion currently underway in the country. important elements for the discussion currently underway in the country.

You can see the analysis HERE.