Subsidios Cruzados en el Seguro de Invalidez y Sobrevivencia
This paper analyzes cross-subsidies in the Survivors and Disability Insurance offered by the new Chilean Pension System. We distinguish between benefit rate and contribution rate, as distinct elements that affect net cross subsidies and net income redistribution effects. Then we estimate of the current benefit rate for the following groups within the covered population: by age, by sex, and by income group.
We find that he oldest age group obtains a significantly larger current benefit rate in comparison to the other age groups, and that the middle income group gets a significantly lower current benefit rate in comparison to the other income groups.
The estimated benefit rate is lower for women than for men, but the difference is not significant. The estimated benefit ratesare defined in relation to current income. The implication is that the regulation that forbids charging different rates for this insurance to people of different groups promotes rent dissipation and is unfair.