In social matters, one of the negative outcomes that Latin America and the Caribbean have traditionally faced is the lack of social security systems that ensure universal coverage and provide sufficient protection against life-cycle risks (illness, disability, occupational hazards, unemployment, old age, and death). This situation of social vulnerability was exposed with particular starkness during the COVID-19 pandemic, which ravaged the region and the world, deteriorating the socioeconomic situation and increasing inequality in virtually all countries. National governments organized a response to the increased social risks by implementing various public policy instruments, which—given the urgency—included cash transfers to different social groups, diverse credit policies with varying objectives depending on the actors involved, withdrawals from pension funds, strengthening of health systems, and so on (ECLAC, 2020) (OECD, 2021). This introduced new features in protection schemes and instruments, constituting an experience that needs to be reviewed and characterized.

However, the structural features of organized social risk coverage remain significant. Thus, most of our countries have exclusionary, inequitable, and fragmented systems because the social security implemented throughout the 20th century was contributory in nature, primarily targeting salaried and subordinate workers. This left agricultural workers, the self-employed, those in the informal sector, and all those who are part of the economically inactive population without social security, either because they were not considered or because the legal requirements did not suit their characteristics, resulting in limited universal coverage. In several of our countries, differentiated benefits were granted depending on the sector of employment. There are contrasts in the benefits provided to private sector workers compared to public sector workers, and social security benefits were greater for the armed forces. The strongest labor unions, through their collective bargaining agreements, managed to improve social security benefits and widen the gap between what is granted to sectors such as teachers, those in strategic industries, and healthcare workers, among others, and the rest of the workforce. The increasing participation of women in the labor market has also led to inequality reflected in their employment conditions and wage levels. Furthermore, the lack of a gender perspective in social security has further exacerbated inequalities for women, as it has negated the benefits of social security by favoring welfare policies based on conditional cash transfers. These policies contribute to the fragmented approach of welfare rather than social security that has prevailed.

The first countries to establish social security systems in Latin America and the Caribbean were Uruguay, Chile, Argentina, Cuba, and Brazil between the 1920s and 1930s. While each country had different designs, they shared common elements that characterize them as public, contributory, and distributive systems. The pensions derived from these systems can be defined as defined benefit (DB) pensions based on intergenerational solidarity. Later, in the 1940s, a second group—Costa Rica, Panama, Peru, Colombia, Bolivia, Ecuador, Paraguay, Venezuela, and Mexico—created their own systems with similar characteristics (Bertranou and Mesa, 1998).

The coverage and financial structure of social security were linked to the processes of industrialization, urbanization, and economic modernization, and were therefore tied to the dynamics of labor markets, primarily the economy's capacity to generate formal wage employment. The region went through several periods of crisis, and the age structure of the population changed. Informal employment and job insecurity began to be seen more as the norm in the labor market than as a circumstantial phenomenon.

In this context, decisions regarding social security, and pension systems in particular, should have been sensitive to the new economic, demographic, and labor market circumstances (Santos, 2006). However, the state coffers were in deficit, and the arrival of an economic model linked to the dynamics of the external market, requiring trade and financial liberalization, privatization processes, and changes in the functions of the state, provided the context for reforming social security systems through private sector participation, either as a manager or by providing services that had previously been the sole responsibility of the state. This mix of public and private elements in the social security sphere increased segmentation and social inequality between those who can access the market to purchase medical services and annuities and the vast majority who can only rely on a public social security system lacking investment and modernization in infrastructure and services. The most revealing development was the privatization of public pensions. In 1981, Chile pioneered pension reform, adopting a privately managed, individually capitalized financial system and initiating a series of pro-capitalization structural reforms in the region (Ramírez et al., 2018). Various arguments were used to justify privatizing pension systems: that pay-as-you-go systems are unsustainable, that capitalization increases savings, or that it is the best system because "the only responsibility lies with the worker," completely abandoning the concept of social security (FIAP, 2011). Promises included better replacement rates and greater coverage at a low transition cost between the public and private systems. Additionally, positive effects on domestic savings, economic growth, competitiveness, and formal employment were predicted.

Four decades after these assumptions were made, privately managed individual capitalization systems blurred the lines of social security, transforming pensions into aspirations for private savings. Nor did they live up to the expectations they had generated. The Chilean experience demonstrated that few people managed to meet the legal requirements, and the pensions offered fell far short of expectations.

In light of this reality, several analyses have shown the limitations of this model if it is established as the sole option for resolving the serious problems of the lack of social security (Orszag and Stiglitz, 2001). Recently, the International Labour Organization (ILO, 2018) documented that, since 2000, 18 countries have reformed and partially or completely reversed privatization reforms, demonstrating that one of the factors that triggered this was the 2008 financial crisis, which affected the pensions of many workers worldwide.

Given this scenario, the Working Group being convened will review the scope and limitations of national social security systems in order to propose alternatives to address the lack of healthcare, the shortage and insufficiency of pensions, and the deterioration of income and social vulnerability of individuals throughout their life cycle.

The search for social protections against the uncertainty and vulnerability that crises of varying types, forms, and scope have caused in our societies is shaping a conceptualization of well-being. In turn, and dialectically, if you will, these theoretical approaches can influence the public policy instruments used by nation-states, thereby endowing welfare regimes with unique characteristics. These regimes, as is known, combine varying degrees of state, market, family, and community networks to address social risks. Thus, the trajectory of social security in the region seems to be progressing along this still unresolved contradiction between its recognition as a human right and its origin as an employment benefit (CISS, 2022). This tension inherent in protective systems in practice also exists in theoretical approaches. There, different perspectives are put forward: from understanding social risk coverage as an individual responsibility of formal workers to protection based on the exercise of "social citizenship," which imposes duties but also rights to protection.

A key aspect of the theoretical relevance analysis lies in the population aging process in the Latin America and Caribbean (LAC) region. At varying paces and intensities, different countries are moving toward more advanced stages of the demographic transition, and population projections point to the consolidation of this process, even though the percentage of young people remains higher. While aging is a global phenomenon, it takes on particular characteristics in LAC. Due to the rapid changes in demographic dynamics—mortality and fertility—the phenomenon is occurring more rapidly in most countries of the region compared to Europe. Consequently, the region will have less time to prepare for the challenges posed by population aging (Ham, 2003; and Chackiel, 2004). One of the priority areas is social security systems.

In the study of social security, particularly pensions, it is important to consider the risks that people experience throughout their lives and that can be mitigated through social security benefits. Technically, these pension models involve two central stages: the working years during which individuals accumulate resources, and retirement, when pension income becomes the primary source of economic security.

In Latin American and Caribbean countries, different conceptual models define the characteristics of pensions in old age (Mesa-Lago). However, in most cases, individual savings are prioritized.

In Latin America and the Caribbean (LAC), a significant proportion of the population holds precarious, temporary jobs without social protection (Uribe, 2002). Furthermore, the region has a high incidence of poverty, unemployment, and underemployment, in a context of limited countercyclical policies. Added to this is gender inequality, which assigns socially constructed activities based on sex, with women performing more domestic, caregiving, and household tasks. This restricts their participation in the labor market and, in turn, discriminates against them in their access to contributory social protection. Consequently, they face limitations in their ability to accumulate savings to self-finance their pensions (Uthoff, 2016).

The sexual division of labor helps explain gender inequalities in pension systems, as women have lower levels of coverage because these systems were designed from a perspective where the worker is male, in the formal sector, with sufficient and stable income; it was assumed that women were dedicated to housework. However, this system is outdated and unrealistic, which generates unequal work burdens by sex and limitations for women in old age.

Another important factor to highlight is the economic cycle that affects the contributory system, as it impacts job quality and contribution capacity. Meanwhile, in non-contributory systems, budgetary constraints affect coverage and the adequacy of guarantees. Thus, promoting public policies that foster better jobs represents a development opportunity and an alternative to counteract the system's shortcomings. However, these policies need to be complemented by economic policy actions to provide viable alternatives in the face of income limitations, health challenges, and the aging population in the region (Uthoff, 2016).

The increase in the retirement age generates a conceptual debate, as it combines changes in population structure with the system's needs to counteract pension limitations. Increased life expectancy presents diverse challenges, including those related to health and well-being. Equity and social justice are challenges that must be addressed. Meanwhile, gender income inequalities in the labor market result in unequal returns and gender disparities, with women often experiencing these inequities more acutely. Labor market entry itself is evidence of gender inequality, favoring male participation and often limiting women's participation due to their socially assigned domestic work. Thus, labor market inequalities are transferred to the pension system, generating vertical and horizontal gender segmentation, as well as concentrating women in informal, discontinuous, temporary, and precarious jobs (Marco, 2004).

Given the challenges already mentioned, one alternative is to strengthen public social security through a social contract based on the principles of universality and solidarity. This would involve subsidies provided by those with higher incomes to those with no income or whose income is so low that they are unable to contribute, with the aim of achieving benefits for everyone (Uthoff, 2016). Furthermore, it is necessary to implement fair and progressive fiscal policies that guarantee redistributive justice, consolidating a social security system with the full exercise of economic and social rights, and with a leading role for the State (ECLAC, 2019).

Given the heterogeneity of Latin American societies, it is recognized that there are no single models; however, the importance of guaranteeing access to a dignified old age for all is paramount. Some alternatives lie in the full exercise of human rights and inclusive public policies that recognize that all work should have social security, especially informal and unpaid work, which is fundamental to the economy but does not generate income guarantees or access to healthcare and pensions, thus representing a significant challenge to overcome.