The Government of Javier Milei he ran the chainsaw through many games to reach the much prized fiscal balance. Among the most affected sectors is the spending allocated to Social security: will fall 14.5% in real terms compared to 2023, as reported by the Public Policy Observatory of the National University of Avellaneda (UNDAV).
The elimination of the mobility formula and, later, the veto of a new law, which provided for a 7.2% increase in salaries to fix the connection between the the management of Alberto Fernandez and the new one established from Consumer Price Index (CPI). He also contemplated that No retiree would earn less than the equivalent of 1.09 basic basket, demanded the payment of pension debts to the provinces and preserved the Sustainability Guarantee Fund of the National Social Security Administration (ANSES) of its liquidation.
Under the law vetoed by the Government, the Minimum retirement in September would have increased by 35.5%of $234,540 to $317,704without considering the bonus.
Now, with the project Budget 2025 This path is consolidated, which will mean a new reduction of 8.7% in pension spendingUNDAV warns. The main reason: the freezing of bonuses for minimum retirees.
He former head of the National Social Security Agency (ANSES) and current president of IERAL, Osvaldo Giordanohad stressed at the time Scope that “the new mobility formula – now repealed – is an opportunity to give greater sustainability to the fiscal balance”. As the former official explained, it corrected future litigation against ANSES and, in turn, “fixed” the difference with the January connection that the Government did not cover in its entirety.
Retirements: lawsuits against ANSES could increase
The Constitution provides that The mobility formula must be sanctioned by lawHowever, the Government modified it through a decree, the 730/2024, through which also eliminated the possibility of recovery of assets.
“In contexts of low inflation, like the current one, salaries would have increased and the minimum today would be $253,074 – with the old formula -. In the future the difference will increase, which could generate litigation against ANSES by retirees” , they point out from UNDAV.
“In parallel, the Government Administration increases its budget by 13% in real terms,” they noted from the Public Policy Observatory.
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How much did the pensioners lose?
The delayed change in the mobility formula implied, according to calculations, the Center for Argentine Political Economy (CEPA)consequences of “vast magnitude on assets, which could not keep pace with prices, given that the update formula has a quarterly ‘delay’.” In that sense, they indicated that in the comparison of salaries compared to November 2023, it was observed that retirees:
- In January 2024 they received between 14.7% and 20.1% less in real terms than in November 2023 (depending on whether the minimum with bonus or above the minimum).
- In February 2024 they charged between 24.7% and 29.5% less than in November 2023.
- And in March the assets were between 13.7% and 19.2% below November 2023.
“This modality involved the recovery of pensions from the bottom of the well to which the Government itself had taken them”says the report.
This vision confronts the official view: “Milei maintained, among the reasons for vetoing, that ‘since we came to power, pensions are 5% higher, that is, pensions beat inflation.’ This is not true. Retirements have not gained power purchasing”says the CEPA report.
The problem is comparativeaccording to the Center, and has a “trap”: “It compares a month that is the last before the quarterly mobility update (November 2023) against a month that had the update incorporated (August or September 2024).” In that line, Retirements without a bonus in the September-November 2024 quarter will remain 4.6% below the same quarter in 2023, while retirements with a bonus would remain 13.6% below.
Hernan Letcher, of CEPA, explained to Scope that Comparisons are made quarterly (compared to the same period of the previous year). The cited case takes from September to November, because it is the last quarter of the previous government and November is the month compared by Milei. Furthermore, they use this data because They already have estimates of what will be charged in November.
Frozen bonds as an adjustment variable
Along with the loss derived from the formula change and the high inflation at the beginning of the year, The compensatory bonus that 70% of retirees received was frozen at $70,000which generated a month-by-month liquefaction of its purchasing capacity. For this reason, those who earn the minimum have not yet recovered the purchasing power of November, but in September 2024 they are still 2.6 points below and 20.3% below the same period in 2023.
While salaries increased 74.3% between March and September, the minimum, with bonus included, only increased 48.9%. If it has been updated in the same proportion, The bonus should be $122,010 in Septemberthat is, $52,010 more than the current amount.
Source: Ambito
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