Abstract:
This thesis addresses the possibility that a less developed nation, such as, Colombia could adopt a universal policy design, such as, the one that functions successfully in a developed country, specifically, the one in New Zealand. Starting in the 19th century, the superannuation schemes in Colombia, and in New Zealand, were designed differently, and have resulted in different outcomes. The universal pension policy may be suitable for Colombia due to that nation, in accordance with other Latin American countries, drew upon the second and third pillar superannuation policy from Chile in the 1990s. However, the retirement coverage rate remains low. The former state created its pension system by following the Bismarckian model, while the latter resembles the Danish one. Even though New Zealand initiated the universal pension act in 2001, its old-age laws can be considered as following the Danish model because the Pension Acts, such as, those enacted in 1898, 1913, and in 1925 did not include contribution density requirements. Nonetheless, those regulations have more restrictions associated with residential qualifications compared with the Pension Act 2001. Such systems have different retirement coverage rate objectives: the Bismarckian model provides superannuation benefits to the working population, while the Danish one insures all citizens independent of their contribution density. In an ideal world, universal coverage is the most desirable option to prevent poverty in old age. Yet, the Colombian General Pension System has witnessed reduced superannuation coverage rates over time. This thesis adopts a lesson drawing approach proposed, among others, by Rose (2005) to analyse the steps that Colombia should follow to adopt a successful adaptation of the universal retirement scheme currently available in New Zealand. I conclude that there are a number of factors, such as, geographic proximity pattern, ageing population, financial sustainability, and superannuation pillar design that would enable Colombia to adopt the first pension pillar successfully. Even so, there are also some challenges, such as, simplicity, policy legacy, institutional weakness, pensionable age, population size, and homeland security that Colombia will need to address to ensure its success – specifically how to decrease poverty among the elderly population without affecting the long-term sustainability of the retirement system.
