Yes, Chile's Private Pension Model Works, Big Time

[Geee]

Investors Business Daily:

Pensions: In Chile, a major study shows the nation's private retirement accounts provide workers pensions worth 87% of their salaries, 73% of that from profits on savings. So much for the canard about the perils of markets.

 

The story was front-page news in Chile's largest newspapers, El Mercurio and La Tercera, on Sept. 3, a powerful affirmation of what former Republican presidential candidates Newt Gingrich and Herman Cain called "The Chilean Model" of private retirement accounts.

 

The study of 28,000 households by Dictuc, a consultancy affiliated with the Catholic University of Chile, showed that male workers who contributed just 10% of their salaries to their retirements for 10 years or more on average earned retirement checks worth about 87% of their top salaries. No 401(k) account needed.

 

That's because in 1981 Chile Labor Minister Jose Pinera replaced the country's bankrupt social security system with this famous system of private accounts.