Bucking a global trend, leftist-led Bolivia is lowering its retirement age and nationalizing its pension funds.
Bolivia's Congress approved legislation early Friday to make Bolivians eligible for full pensions at age 58. The country's 70,000 miners will get to retire two years earlier.
The previous retirement age was 65 for men and 60 for women.
Bolivia's decision to lower its retirement age runs counter to a global trend to raise retirement ages as life expectancies rise, birth rates drop and national treasuries come under strain from pension obligations. France raised its minimum retirement age to 62 last month -- full benefits aren't available now until 67 -- while Greece is drastically cutting back early retirement opportunities.
President Evo Morales had pushed hard for the pension reform law, which also brings the landlocked Andean nation's pension system under state control and extends pension protection to the 60 percent of Bolivians who work in the informal sector and currently lack pensions.
Morales is expected to sign the law, which is scheduled to take effect in mid-2011.
Bolivia's Federation of Private Employers opposed the law, expressing skepticism the new system will be sustainable. Thirteen years ago, Bolivia privatized its pension funds after a state-run system collapsed.
The country's two privately run pension funds -- covering 1.2 million workers and run by Zurich Financial Services and the BBVA bank -- will now revert to state control.
The law creates a "solidarity fund" into which workers and companies will pay. It will provide minimal pensions to informal sector workers who make voluntary contributions of their own for 10 years.
Bolivia's worker's federation, known by its Spanish initials COB, has been a strong supporter of Morales, a former coca growers' union leader who is also the country's first indigenous president.
And there you have it. While austerity and right-wing economic policies are being implemented in countries struggling to reduce their debt, the little tiny nation of Bolivia decided to buck the trend, lower the retirement age, and nationalize pensions. I know a lot of you are thinking "what's President Morales sniffing?", but maybe he's onto something (or at least he thinks so -- this is just an extreme case of pension politics). In any event, Christmas came early to Bolivia this year, but it remains to be seen how well this "solidarity fund" will do in the future. Nationalizing pensions buys you some votes and some time, but it will ultimately fail because of massive corruption and total lack of governance.