The connection between the formula of the previous Governmentwhich would be valid until Marchand the one that would apply from April 1st does not include January 2024 inflationaccording to the government’s megaproject.
This is what the Congressional Budget Office (CPO) says. “The current formula will use, to calculate the mobility of March 2024, the information from the quarter October-December 2023, while the new formula will take the information from February 2024 for the mobility of the following month (April 2024), for example “which means that the change in prices in January would not be included in the recomposition of pension benefits.” It is estimated that inflation in January could be between 20 and 25%
Consequentially, so as not to “skip” an entire month of mobility, Already in March, mobility due to inflation should begin to govern based on January CPI data, plus a few additional percentages to at least recover the 2023 loss. And in April, adjust assets based on February CPI , plus a further continuation with that. recomposition.
Last year’s loss must be added to the loss of between 20 and 25% due to January inflation. Considering bonuses, “during 2023, the loss of purchasing power for those who received the lowest salaries (at or close to the guaranteed minimum wage, which represents 48% of beneficiaries) was 14.1%. For the remaining pensioners and retirees, the loss of purchasing power was 32.2%,” calculates the OPC.
According to IARAF (Institute for Fiscal Analysis), “during 2024the real loss of pensions and pensions would be 16.4% compared to 2023, confirming the seventh consecutive year of real decline”, and “on the fiscal side, the real size of pension spending will decrease. Considering a real decline in GDP of 4% in 2024, the relative weight of retirements could decrease by 0.8 percentage points of GDP”.
The OPC Report explains it “loss in the purchase value of pension assets It is a consequence of the same inflationary dynamic, since an acceleration of inflation deteriorates the real value of pensions (using past/historical information for its calculation), while on the contrary a deceleration restores them. For this reason, it is estimated that if a slowdown in prices occurs during 2024, real assets will likely decline during the first quarter due to splicing and the application of the current formula, and then begin to recover as increases based on past inflation are higher than new prices. The final effect will depend on how pronounced the inflationary decline will be over the course of the year.”
For this reason, the IARAF Report also highlights that “the key point is whether this increase will be sufficient to offset the real decline that wages will have in the first quarter of the year. Much more relevant is whether it will be able to make up for some of what has been lost over the last 6 years.
On the other hand, the OPC Report indicates that if the retirement and pension mobility scheme contained in the megabill had been implemented in 2023, the pension loss would have been 22%. This hypothetical reduction – he clarifies – serves to avoid making inflation projections by projecting the application of the mobility variables for 2024 onto 2023.
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Source: Clarin
