In 1981 José Piñera created Chile’s defined contribution scheme as social security minister when Chile was under the military dictatorship of Augusto Pinochet. The system required employees to set aside 10 percent of their income, and by doing this it provided a huge boost for savings, investment, employment and growth. In fact, the World Bank has held out Chile’s defined contribution system as the platinum standard. It was so well respected that 30 other countries in Latin America copied the Chilean retirement model. Investments drove Chile’s nascent capital markets to the extent that pension funds, known as AFPs, now exceed $176 billion, or around 70 percent of GDP.

Unfortunately, there have been some struggles recently as savings rates have plummeted with the informal economy, which has led to some participants skipping payments. Add to that the lack of competition among private retirement program providers that leads to oligopolies and