Press "Enter" to skip to content

Retirement: the keys and inconsistencies of the reform that is voted today

During 2020 the Government applied an adjustment to retirees, by suspending the mode of updates established by law and granting lower percentages of increases Source: LA NACION – Credit: ignacio sanchez

As of 2021 the update of the value of retirements and pensions will be made according to a formula based on the interannual variation of the collection of some national taxes and on the quarterly evolution of wages. This will be the case, if the bill promoted by the Executive Power is approved, which is being debated today in the Chamber of Deputies and which has already been voted in the Senate.

Despite the fact that the objective of retirement mobility – guaranteed by the National Constitution – is to prevent monthly assets from losing purchasing power over time, The mechanism proposed by the Executive Power does not contemplate the inflation index, neither as a calculation variable nor as a floor for periodic increases. On the other hand, the formula does foresee the application of a cap on increases, which is linked to the evolution of the resources received by Anses.

The calculation. The recompositions will be granted on a quarterly basis and will be in March, June, September and December. The formula is integrated, on the one hand, with 50% of the variation in the collection, by benefit paid, of the tax resources destined totally or partially to social security; among them are the check tax, VAT, fuel tax and the PAIS tax (applied to the purchase of foreign currency). That comparison will be “between identical quarters of consecutive years.” The other component of the formula is 50% of the quarterly increase in wages; Two indicators will be considered, to take the one with the highest variation. One is the Salary Index published by Indec and the other is the Average Taxable Remuneration of Stable Workers (Ripte), from the Ministry of Social Security.

The top. When each year corresponds to determine the increase in December, the same calculation will be used as for the previous months, but a comparison will be made to avoid that the increase of the year exceeds by 3% the variation that in a period of 12 months has had the collection for the benefit of all the resources destined to social security (contributions and contributions and taxes assigned to that destination).

Discretion risk. The text of the project leaves non-minor issues subject to subsequent regulations, which will be regulations of a lower rank than that of a law and which leave room for discretion. It is one of the many issues that received questions from economists and pensioners, because it aggravates the lack of certainty for retirees who, in itself, has the use of tax collection as a fundamental variable of the calculation. The initiative of the Executive Power says that the values ​​of salaries, the amount of benefits and the collection must be taken “in a homogeneous way”, and does not set any criteria for the task of homogenization, but provides that “the regulations will establish the mechanisms to be used to adjust the values ​​of each variable “. This clause means that certain events such as a tax reform should not influence the calculation.

For example, if there were a modification in the destinations to which taxes were assigned, applying what the project says would imply simulations so that mobility is calculated as if a certain tax were among those derived to the Anses (without actually is), or as if another tax was not (even if it is). Consequently, the principle set forth in the project itself, according to which the evolution of the resources received by the system must be followed, will be distorted.

Rafael Rofman, principal investigator of Economic Development and Social Protection of Cippec, warns that what can affect the “homogeneity” in the comparison is not only referred to regulatory changes, but also to other types of issues. For example, if there were an acceleration in the rate of devaluation, there would be an effect on the collection of the PAIS tax. The economist argues that the homogenization clause seems impractical and that it is not at all convenient to use the collection in the formula.

Criticisms of the use of the collection. What led to the inclusion of this clarification that “homogeneous values” should be measured is in the difficulties derived from the use of tax revenues as part of the formula. The incorporation of this variable was discouraged by various specialists who spoke this year at the meetings of a mixed commission, made up of officials and legislators, which by law had the mission of preparing a proposal. In practice, the working group listened to economists, pension planners and lawyers in about twenty meetings. And then, at the meeting in which a proposal sent by the Executive Power was received (based on returning to the formula that governed between 2009 and 2017), the ruling party legislators gave their approval to the text without a discussion that would lead to possible modifications.

According to the economist Oscar Cetrángolo, a researcher at the Interdisciplinary Institute of Political Economy of the UBA and Conicet, it makes no sense to use collection because it is a variable that is not linked to the goal of maintaining the value of assets and that has dependent variations. of various factors.

There was a message from the Government with which it was admitted that a good functioning of the formula without growth is not expected: “If Argentina does not grow, there is no mobility formula, nor Coca Cola formula that can favor anyone”, the executive director of the Anses, Fernanda Raverta had said when presenting in the mixed commission. For many analysts, it is not acceptable for retirees to be told that if the economy does not grow, the real value of their assets will not be maintained.

For Rofman, using part of the collection as the basis for the calculation has at least three problems: the high volatility of the variable; the little transparency of the data (something that was verified between 2009 and 2017, when the Kirchnerism formula ruled, approved after the order given by the Supreme Court), and the high exposure to rule changes.

The setting already applied. Between the validity of the calculation of law 27,426, approved in 2017, and that of the formula that would be approved today, there was a full year in which the increases were defined in a discretionary manner and downwards by the Executive Power.

Had the formula approved during the macrismo been in force in the midst of protests in which tons of stones were thrown, the increase would have been the same for everyone, 42% among the four recompositions of the year. Due to the Alberto Fernández decrees, retirees received much less: between 24.3% and 35.3%, depending on the level of income. According to the previous formula, this year the assets were going to recover around 4 or 4.5% in real terms. On the other hand, all those who charge more than the minimum will lose again (something that happened in 2018 and 2019) and those with basic assets could tie them to inflation, or they could also suffer a fall again (that will be known when inflation is known from December).

In a report sent to senators before they voted on the bill, the Association of Lawyers of Buenos Aires (AABA) warned that the possible new law will cause high litigation. And he warned that, in order not to leave firm in time the effects of a measure taken under a state of emergency (which was declared in December 2019), the percentage of the first increase granted by the new formula should be calculated on the assets that had result if the previous formula is not suspended.

If that were done and if a 6% increase is assumed in March, the minimum credit would go to $ 21,780, instead of $ 20,177, a figure that would reach (in that case) according to the Government’s plan. This year, the suspension of the calculation caused that retirees stopped receiving, altogether, about $ 100.000 million; For the government, this means not only tax savings for 2020, but also a reduction in the base on which future increases will be applied. An adjustment this year, with effects for the following years.

According to the criteria of

More information


Be First to Comment

Leave a Reply

Your email address will not be published. Required fields are marked *