In the midst of the electoral campaign in Peru to succeed Alan García in the presidency, a major liberal forum organized by the Libertad movement, led by the then presidential candidate Mario Vargas Llosa, took place in Lima in March 1990.

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There I had my first contact with José Piñera. I liked the logic of his proposals to address the pension problem. But above all, I was struck by the solidity of the results of the Chilean system. The pension funds were already the main factor in the recovery of savings in that country and were injecting dynamism into its capital market.

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A few months later, César Gaviria was elected president of Colombia. His team of collaborators was in feverish activity designing the major structural reforms that the new president would launch. One of them was the Labor Reform, which aimed to flexibilize the rigid Colombian labor system. In the discussion on this reform, the need to address the issue of social security was beginning to become evident. I spoke with Gaviria about José Piñera's presentation and proposed inviting him to Bogotá. I organized a public forum to present the Chilean system and at the same time put the debate on the necessary reform of social security in Colombia into public discussion.

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The forum took place on Monday, June 11, 1990, at the Hilton Hotel in Bogotá. The president-elect attended, along with several of his future ministers, and it was a success. The arguments and results presented by the former Chilean minister made a deep impression among those knowledgeable about the problem and among Colombian public opinion. Later that same day, Piñera met with the president-elect and his team of economic advisors. It was an intense five-hour meeting after which Gaviria's economic team was convinced of the need to push forward the reform based on the Chilean individual capitalization system.

 

The next step was a delegation from the economic team to Chile to learn about the system firsthand. The debate on the reform was arduous and prolonged, and it was approved in December 1993. The Government proposed to Congress a complete substitution of the public regime by the individual capitalization one, in the Chilean style, but this proposal was not accepted.

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A political transaction was finally reached that resulted in a hybrid system in which two regimes coexist and compete, one administered by the former state monopoly and the other by private pension fund administrators under an individual capitalization regime.

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Today, more and more countries in Latin America have reformed their pension systems toward individual capitalization systems. Each country has been designing and adapting the original Chilean model according to its economic and political conditions. These reforms are indispensable steps to generate the conditions for the long-term development of our peoples.