Over the last decade, more than a dozen countries in Latin America and Central and Eastern Europe have partially or completely replaced public pay-as-you-go pension systems with funded systems managed by private financial institutions. The World Bank has been a major catalyst for this shift, providing loans and technical support. This paper examines the main arguments for replacing public pay-as-you-go systems with privately managed funded systems. In conclusion, the paper draws the lessons of the different country experiences and demonstrates the numerous deficiencies in the funded systems as compared to the pay-as-you-go systems they replaced. Annexed is a brief account of the transition in each of the countries where it has been implemented, examining how the previous systems have been modified and the main features of the new systems that have been established.