In institutional terms, long-term reform should aim for a shift to a pension system based on individual savings accounts, as in Chile, as opposed to the current state run, pay-as-you-go pension systems. The individualized savings schemes let each household choose its own desired level of savings according to its particular intertemporal preferences and circumstances. The individualized system also eliminates the debilitating sense of universal entitlement that helped to bankrupt the old regimes and that still pervades the new ones. The privatization process can be linked to the pension reform, by earmarking privatization revenues or enterprise shares now held by the state to help finance the changeover to a private, individualized pension system.

The Chilean system, I note, is considered something between an utter failure and very problematic by Chile's full political spectrum.

The road of excess leads to the palace of wisdom - William Blake