A report of the Institute of Economic Research for the Argentine and Latin American Reality (IERAL) suggests that during the last decadein seven years retirements they lost against inflation. In only three, assets managed to recover purchasing capacity.
“In the ten years that From 2014 to 2023, inflation exceeded mobility on 7 occasions, and therefore the real asset fell. Since 2014, every time inflation accelerated and GDP fell, retirement assets fell, except in 2022,” says IERAL in its latest Situation Report.
During that period there were two ways to adjust retirement benefits: one was due to the combination of past salary increases and collections and the other was due to a combination of inflation with salary increases.
Experts agree that the first is procyclical since in times of economic growth salaries rise and collection increases and supposedly generates an improvement in income, as long as it is above prices. On the contrary, in times of decline in activity, the losses in purchasing power worsen. The second, by taking inflation into account, tends to nuance the peaks and valleys of economic activity.
“It is observed that Starting in 2018, real retirement assets tended to lose purchasing power more frequentlygenerally coinciding with falls in GDP and accelerations in inflation,” says the IERAL study.
He maintains that “in this recessive and inflationary context (stagflation), it was common for increases in assets to fail to match the rise in prices, causing a decrease in the real income of retirees.”
When and how much did retirees lose
Pension benefits without bonus compensation They fell 5% in real terms in 2014; 3%, in 2017; 13% in 2018; 2% in 2019; 1% in 2020; 11% in 2022 and 32% in 2023. On the other hand, they beat inflation in 2015, with 3% real; 2017, 3% and 2021, 1%.
Why did they go down?
IERAL points out that the negative results of mobility that occurred in those years are explained by two reasons: first, The variables used in the mobility formula, such as salaries and revenue, increased less than inflation, causing real falls in assets, despite the adjustments.
Then, the delays with which mobility is applied, updating the assets with Data on inflation, salaries or past collections that were lower than current values aggravated the deterioration.
On the contrary, when inflation GDP slows down and improves, the mobility formulas used in the past have tended to generate improvements in real assetsbecause in these cases salaries and revenue tend to beat inflation.
The weight of the system in relation to production
In the first two months of the year the governmentor drastically liquefied pensions by almost 40%. With this, the weight of spending in GDP was below 5%. In Alberto Fernandez’s management it ended at a level of 7%. The recent record was in 2017 with 9% of GDP.
Some analysts assume thatJavier Milei’s government aims to place pension spending at the levels it had in the 1990s, which was 5% of GDP. But the problem is that now there are twice as many people getting paid.
Sergio Chouza, from Consultora Sarandí, estimates that from the 3.6 million retirees and pensioners (contributory and non-contributory) between 2001 and 2005, almost 4 million benefits were added in 2014. and almost 5 million at the current time, as a result of the moratoriums.
Chouza has a positive view on the inclusion of beneficiaries without contributions by claiming “the redistributive vocation of successive governments who, with their pluses and minuses, supported income transfer policies to minimally compensate those who fell out of the system.”
“One of the first milestones was the strengthening of the pension policy, through successive moratoriums that implied a significant jump in the number of beneficiaries of social security coverage,” he points out.
More than one economist has raised doubts about this statement. And also It can be concluded that given the evident liquefaction of assets, the moratoriums would have served more to extend poverty to the 3.6 million retirees with contributions, rather than having removed those who entered from poverty. by alternative mechanisms.
Source: Ambito
