He Executive power sent to Parliament the bill for the rescue of the Bank Retirement and Pension Fund (CJPB)one of the issues that had remained pending in the pension system after the approval of the social security reform in Uruguay. The financing contemplated by the initiative is 1,000 million dollars.
After months of negotiation between the government, private banks and the Association of Bank Employees of Uruguay (AEBU)the project that resulted from the commitment of all the parties involved entered Parliament, where it will receive express treatment to comply with the constitutional limit for the approval of this type of initiatives – until the end of October, when there will be only one year left until the elections general.
The proposal establishes a set of modifications to the current regime – established in the Organic Law of the Banking Retirement and Pension Fund—, with the objective of achieving the medium-term viability of the Bank Cash —in critical financial situation—; and foresees a need for financing of 1 billion dollarsfor a period of at least 12 years.
What does the rescue of the Caja Bancaria propose?
As had already been advanced in different instances, the project agreed upon between the government, the banks and the union implies the contribution in equal parts of all the protagonists. That is, what was called a joint exit.
On the one hand, the proposal implies a change in conditions for retirement —the retirement age will be progressively raised to 65 years and a “pecuniary benefit of 4%” will be applied—, as well as a contribution from retirees under the 2008 law; On the other hand, an increase in the Employer Complementary Benefit (PCP) that the banks pay for each worker and a “temporary additional contribution”; and finally a debt issue with state guarantee for up to 400 million dollars—issuance of a bond for a maximum total amount of 2,625 million Indexed Units (UI) through public debt securities or through loans with multilateral organizations.
In the explanatory statement, the Executive Branch warned that the operating deficit of the fund will lead to its financial reserves being depleted this year, and the situation of Red numbers It will extend “for more than a decade.”
“Between the last months of 2023 and the year 2035, the projection used as a reference for the design of the measures indicates a accumulated deficit which, taken to dollars of the year 2023, is located in 994 million dollars. The pace of the deficit in the first years is more intense. In particular, between 2024 and 2030, more than 100 million dollars per year are necessary to be able to meet the obligations of the fund,” maintains the argument presented by the government.
The direct contribution of the banks during the first years, as well as the contribution of liabilities retired by the 2008 law, finds reasons why the proposed parameter adjustment measures would have a late financial impact.
According to the Executive Branch, estimates indicate that the debt contemplated It can be canceled between 2040 and 2043.
Source: Ambito
