Reformed Social Security Systems Favor Women

November 4, 2003 (—Contrary to arguments from women and senior's groups that maintaining the current Social Security system was vital to ensuring women's financial security, a recent finding by the National Center for Policy Analysis (NCPA) shows that women, especially low-income women, have the most to gain from a reformed Social Security system.

The NCPA study looked at  Argentina, Chile and Mexico – nations that have already reformed their pension systems – and evaluated the effects those reforms had on men and women.   The social security systems in these countries were, like the US system, unsustainable, so the NCPA compared relative positions, instead of the absolute value of benefits.    Their examination showed a shift in favor of women under the reformed systems.   For example, when the study compared married women to male high school dropouts:

  • In Chile, the lifetime benefits of married women with full work careers rose from 71% of men’s benefits to 96%.
  • In  Argentina , the same women’s benefits rose from 65% to 108% of men’s.
  • In  Mexico , the same women’s benefits rose from 80% to 98% of men’s.

In these three countries, husbands are required to purchase a joint annuity or other pension to help provide for surviving wives.    Women’s pensions have income from three sources:   personal accounts, public benefits and the required joint pensions.   Since these joint pensions are required, and women can keep their own personal earned pensions, they fare better than those women in countries such as the US where women cannot keep their own benefits if they wish to receive the widow’s benefit.