Relative Rate of Return Guarantees for Social Security Defined Contribution Plans: What Do They Accomplish? John A. Turner and David M. Rajnes ABSTRACT Many social security defined contribution systems provide a rate of return guarantee. Relative guarantees, the most common type used, are tied to an index. This article compares the guarantees used by Argentina, Chile and Poland, which represent the range of relative guarantees provided around the world in mandatory defined contribution systems. This comparison indicates that the structure of guarantees does matter. The guarantee in Chile generally provides a higher real rate of return, less variability in the real rate of return, and better protection against inflation than do the guarantees in Argentina and Poland.

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