The Government made changes to the omnibus lawamong which included the modification of the mobility formula for April. In this way, in the first quarter of the year retirees will be paid based on the increase in retirement assets provided by the formula that governed the administration of Alberto Fernandez, while in the fourth month of the year they will begin to have inflation-indexed updates. Do they win or lose with this change?
With the new modification of the settings, which will become tied to the consumer price index (CPI) which measures the National Institute of Statistics and Censuses (INDEC), The question returned to the center of the scene as to whether their assets will it liquefy or not the elderly, and if it is really “sustainable” the new formula for the pension system.
Changes in the retirement formula: what do economists think?
In the current scenario of inflationary acceleration, the current formula implies a liquefaction of retirees’ income in the first quarter of the year, given that It weights in equal parts the salary variation (opting for the greatest variation between two indices, the RIPTE -from the Ministry of Labor- and the Salary Index -Indec-) and the increase in tax collection from the ANSES.
“Pensions will never beat inflation. By April they will have lost 25 points like with Mauricio Macri“, highlights the director Center for Argentine Political Economy (CEPA), Hernan Letcher.
For his part, the pension lawyer, Christian D’Alessandro, explained in dialogue with Ambit that “in the first quarter, retirees will receive about formula that will be below inflation“and that with him have liquefiedonly in April will they start curb inflationmonthly in arrears. “But in the meantime, everything lost is not recovered.”he assured.
The policy of bonuses mitigated this loss for the beneficiaries of the minimum retirement, which is what led officials of the outgoing government to affirm that “the pensions matched inflation.” But actually, that calculation is made “between tips”that is, it only takes into account the moments of the increases, but does not consider the loss that occurred while inflation is frozen during a quarter in which the prices continue to rise.
Can pensions be above inflation?
According to the economists, No. And this occurs first because by tying retirement to inflation it will prevent its current levels from growing, and the other because with the change in the formula the inflationary effect of January will not be applied.
An estimate made by the economist Emmanuel Alvarez Agis indicates that in March there could be a 35% adjustment in pensions while inflation between December and February would be around 76%. Attribute this difference to lag effect: For the moment in which the increase occurs, the latest data is not taken into account but rather those from two months before.
On the other hand, it indicates that, when the formula is changed in April, the monthly inflation data for February will be used, which will be the last available. And this carries the risk of “skipping” a month in the update calculation.
“Considering that the adjustment formula on March 24 takes variations until December 23 and the new update mechanism will be determined from the inflation of February 24 onwards. Therefore, the change in formula would actually be a hidden adjustment, which consists in recognize 11 of the 12 months of inflation in 2024″, says the economist.
Source: Ambito
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