Nicaragua Privatizes Social Security System

January 20, 2000

Nicaragua has become the latest Latin American nation to announce that it will replace its pay-as-you go Social Security system with a Chilean-style system based on individual accounts. The new system will permit workers, employers and the government to contribute a combined total of 10 percent of wages to individual accounts that will be invested in private capital markets. Workers will receive "contribution booklets," as in Chile, allowing them to track their investments. Investments will be managed by the private sector and workers will have a choice of funds. The new system is expected to be in place early next year.

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