What could happen to retirements and pensions during 2024?

The suspension of the mobility formula and the granting by the Government of discretionary increases by decree – as contained in the megaproject that the Executive sent to Congress – with the aim of reduce the fiscal deficit by 0.4 points of GDP – can lead to a greater deterioration of the assets of pensioners and retirees, greater than what they had under the governments of Mauricio Macri and Alberto Fernández.

Since the megaproject does not establish the level, frequency or scope of the increases, the Congressional Budget Office (CPO) released a report analyzing the alternatives that could be presented this year, if Congress approves the government initiative .

“Article 106 of the bill suspends the mobility of quarterly salary adjustments and family allowances, subject to the evolution of the salaries and resources of the ANSeS, and gives the Executive the power to establish such updates without defining a parameter to this effect. This prevents a precise calculation of the fiscal impact, but allows us to describe the possible scenarios according to the criteria that this energy will use in the future,” we read in the Report.

Here’s how he estimated different scenarios:

• If they weren’t there Without any increase over the course of the year, assets would suffer a deterioration in their purchasing power by 69.9%. and pension benefits would go from 6 to 4.5% of GDP. Half of the beneficiaries would be destitute and 33% of them would be poor.

• If there was just one fix for at the lowest income, the loss for those earning three or more minimum wages would be 69.9%. The ANSeS would have a surplus equal to 1.2% of GDP and pension benefits would represent 5% of GDP.

• If all assets increased in the same proportion according to the evolution of the ANSeS funds, the common loss it would be 19%. If this strategy prioritized those with lower incomes, the loss of change would rise to 40%.

• If all assets increased according to inflation, there would be no loss of purchasing power and the ANSeS deficit would rise to 0.8% of GDP, but this the variant is excluded.

This last variant should be excluded because Minister Luis Caputo admitted that that would be the objective reduce the pension deficit by 0.4% of GDP. Even so, if the current purchasing power of pensions and pensions were maintained, the enormous loss accumulated over these years would remain unchanged.

This implies – as explained Clarion –between September 2017 and December 2023, a average worsening of pension by 40%with a drop in minimum wages by 30% and average and upper wages by 55%.

The OPC report recognizes that the pension deficit has been reduced in recent years thanks to the huge decline in the purchasing power of pensions. And it is clear that the same would happen if the objective was to reduce it by another 0.4% of GDP.

In relation to the mobility formula, the Report admits that “an acceleration of inflation deteriorates the real value of pensions, and a slowdown brings them back together” because the increases are calculated using variables from previous months, with higher values.

Consequently, if the Government is confident that the increase in prices will slow down over the course of the year, the “suspension” of the formula responds to the objective of ensuring that assets do not recover from the losses of recent years and may even suffer new declines.

For now, with official inflation data for December of 25.5% and a projection of a price increase in January of 25%, according to analysts and consultants according to the REM (Survey of Market Expectations reported by the Central Bank), pensions and pensions will have a 23% worsening in just 2 monthswith the aggravating circumstance that the lowest salaries have stopped receiving VAT refunds up to $18,800.

These losses add to those of recent years. Therefore, between September 2017 (basis adopted due to the change in mobility during the government of Mauricio Macri) and December 2019, pensions and pensions and other social benefits had a worsening of 19.5% in relation to inflation.

In 2020, already with Alberto Fernández, with increases differentiated by decree, pensions and pensions increased between 35.3% and 24.3% against an inflation of 36.1%.

In turn, “from the application of the 2021 adjustment formula until December 2023, the minimum assets that had full benefits suffered a loss of purchasing power of 3.6% and the rest of 36.5%,” calculates the OPC.

And it clarifies that “only 48.6% of pensioners and pensioners of the General Scheme, who receive the minimum pension income or amounts close to it, they received some type of bonus, so more than half of the recipients saw a reduction their monthly earnings by comparing them with the change in prices.