According to the Associated Press, Bolivia’s Congress approved legislation last week to make Bolivians eligible for full pensions at age 58. The country’s 70,000 miners will get to retire two years earlier.
The previous retirement age was 65 for men and 60 for women.
Bolivia’s decision to lower its retirement age is something of an outlier position among world economies. France recently raised its minimum retirement age to 62, while increasing the retirement age for full benefits to 67. However, last month Hungary initiated what was effectively a nationalization of its private pension system (see Hungary Issues Pension Fund Ultimatum).
The Bolivian law creates a “solidarity fund” into which workers and companies will pay. It will provide minimal pensions to informal sector workers who make voluntary contributions of their own for 10 years.
The country’s two privately run pension funds — covering 1.2 million workers and run by Zurich Financial Services and the BBVA bank — will now revert to state control.
President Evo Morales had pushed hard for the pension reform law, which also brings the landlocked Andean nation’s pension system under state control and extends pension protection to the 60% of Bolivians who work in the informal sector and currently lack pensions. According to the AP, Morales is expected to sign the law, which is scheduled to take effect in mid-2011.
Ironically, thirteen years ago, Bolivia privatized its pension funds after a state-run system collapsed.