“Mobility It’s not about rebuilding pensions” She said Alessandro Chiti in the Forecasting Commission of the Chamber of Deputies, last week he defended on behalf of the Government the official position with respect to DNU 274/24 which modified the mobility formula. Chiti led the ANSeS during the government of Mauricio Macri. If mobility does not have to recompose pensions, it is and is useful reduce pension assets?
Mobility involves two distinct phases: “The first is to determine the pensioner’s initial assets, which must reflect the standard of living enjoyed by the new pensioner in his active life. The second phase is for maintain this standard of living over time until the end of its existence,” he said Clarion former head of the Federal Chamber of Social Security, Luis Rene Herrero.
Especially in recent years, due to the worsening of salaries and the updating of the coefficients, of the initial assets was determined “downwards”. And in the second phase mobility was also used “downwards”. liquefy the expense AND reduce pension benefits.
For example, those who retired in 2017 with 65% or 70% of the average salary of the last few years (maximums due to the method of calculating the initial salary) Today you earn 50% of your salary or less. The explanation is that pension benefits are in nominal terms increased less than wagesand both much less than inflation.
The new DNU 274/24 does not provide for any recovery clause of the retirement assets lost in the last few years that arrive up to 54% (without bonus) e up to 30% (with bonuses). The new formula It only adjusts for inflation with a lag of 2 months. For employment, July for May CPI.
“So everything has been lost by pensioners in recent years it doesn’t recover. Starting from DNU 274, They will lose less and may stop losing, through the application of the CPI, and they will basically do so if the delay allows them to equalize inflation, which is expected to decline. That necktie it would happen mid-year. It is expected that from that moment onwards we will proceed with the recovery of salaries (SMVM RIPTE, Indec Salari, etc.). But pensioners would be excluded from this recovery,” the lawyer said. Hannibal Paz. That is, the loss of pension is perpetuated “forever”.
The specialist Elsa Rodriguez Romero accepts that “mobility has no other function than to maintain, over time, the value of the social security assets. It is not its function to improve it, but it is undoubtedly what it cannot do reduce it under the guise of a raise which, ultimately, is not the case. If the mobility of recent years has not been corrected, now we need to recompose the structure. Otherwise any future mobility, however right it may seem, will only serve to continue to maintain the loss of value of the assets”.
Meanwhile, for the consultancy firm IDESA, “to get an idea of the orders of magnitude, in March 2024 the real level of pensions (not counting the bonus) That’s 23% lower than the 2023 average and 50% lower than the 2017 average. It was to be expected that, when inflation fell, with the old formula (AF) there would be some recovery in the medium term.”
In turn, the new mobility formula – adjustment for inflation – “from the point of view of pensioners, stops the real deterioration of pensions, but perpetuates its liquefaction. That is, unless there are extraordinary increases in pensions in the future, in 2024 the real value of pensions will be liquefied 10% below average in 2023”adds the consultancy firm IDESA.
For its part, a Report from the Mediterranean Foundation indicates that the application of mobility due to inflation initially improves wages compared to what would happen with Alberto Fernández’s current mobility law. But if inflation drops and the economy recovers – Javier Milei bets – the assets they would evolve below what would emerge from the current mobility formula AF.
“When inflation slows down and GDP improves, mobility formulas are used in the past create improvements in real goods because in these cases salaries and income tend to exceed inflation,” we read in the Report.
If the objective of the mobility formula is to preserve the purchasing power of pensions over time, providing certainty to beneficiaries regarding the evolution of their purchasing power, it is convenient use inflation as a mobility rule, with as little delay as possible.
If, however, the objective is for pensions to evolve in a similar way to wages, real wages will improve if GDP and productivity grow in the long run, but otherwise decrease.
Accordingly, for pensioners the best option it would mean combining both alternatives: so that the assets do not continue to deteriorate in the future (in this case until June, the final moment of the combination of the formulas) it is advisable the monthly adjustment for inflation since April and continue later due to inflation, wages and economic growth, of both majors.
At the same time, due to the sharp decline in recent years, it would be necessary to determine a starting point recovery path so that losses are not perpetuated or become “lifelong.”
According to the Mediterranean Foundation Report, pension spending evolved with an increasing trend between 2004 and 2017, both due to a greater number of beneficiaries of the moratoriums and due to several years of real improvements in activities. In 2015 the expenses reached 8.9% of GDP, double that of 2004. However, 2017 is one of the peaks of the series, where pension disbursements were 17.7 billion pesos (9.5% of GDP).
In 2017, pension spending was decreasing every year in real terms and almost always compared to the country’s production (GDP).
The year 2023 ended with a pension expense comparable to that of 2012, which represents 7.7% of GDP. Compared to 2015, spending decreased by 11.1% in real terms and was reduced by 1.3 points of GDP, going from 8.9% in 2015 to 7.7% last year.
And what happened to income?
Around 12 million employed and self-employed workers contribute to ANSeS out of an active population of 20 million employed workers. Represents 40% informality which rises to almost 50% in the private sector, percentages that continue to increase, despite the decline in wages and labor costs, due to the tolerance and absence of the State in the control of contribution payments and in the approval of employers of work that they take on informally or through the Monotributo, in this case charging the worker himself with the responsibility of the entire contribution which has lower contributions and contributions.
Furthermore, due to exemptions and reductions in employer contributions, the Treasury stops collecting annually (“tax expenditure”). almost 1% of GDP (4 billion dollars).
This has determined that when this large informal segment will reach retirement age Don’t count on 30 years of minimum contributions to get your pension.
Through the moratoriums and also the PUAM (Universal Benefit for the Elderly), almost 4 million people have currently been able to retire with assets that They constitute approximately 80% of the minimum assets. And the number is increasing, to the point that 8 out of 10 pensions come from moratoriums and Puam.
Now, in the Basi law sent to Congress, the Government proposes to repeal the most important and recent moratorium. If admitted, those who do not meet the 30 years of contributions and if they demonstrate that they are in a “situation of socio-economic and financial vulnerability” They will only be able to retire at 65 (both men and women aged between 60 and 65) with 80% of the minimum assets, without the right to widowhoodregardless of the contributions actually made in active working life.
Source: Clarin
