Argentine Congress reforms pension programs amid violent protests

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After a marathonic session in the Chamber of Deputies, and hours after a day of extreme violence outside the Congress, the ruling party managed to approve this morning the pension reform with 127 votes in favor, 117 against and two abstentions.

Mauricio Macri inaguró el Metrobus Sur
President Mauricio Macri has prepared a package of reforms to reduce fiscal deficit and attract foreign investment. Credit: Gobierno de la Ciudad de Buenos Aires [CC BY 2.0], via Flickr.

The lower house approved a law for the reform of the update of pensions’ formula after twelve hours of open debate, tantrums and unsuccessful calls by the opposition to lift the session as last Thursday. The Government wants to save some 60,000 million pesos (3.4 billion U.S. dollars approx.) in 2018 with this bill.

The government allied with the approval of the reform after a day with incidents and clashes between protesters and security forces, which ended with 162 injured, including 88 police officers, and 61 detainees. Last night there were cacerolazos in different neighborhoods of the Capital and a crowd concentrated near the national assembly.

The project establishes a new formula for calculating pensions update. Unlike the current one, which mainly considers the evolution of salaries and the collection of tax revenues received by ANSES (Argentine government social insurance agency), the new one is composed in a ratio of 70/30 by the prices’ variation (inflation) and the average of wages from workers in dependency relationship.

The new formula, which would be applied every three months, does not include inflation in the last quarter of this year. Therefore, after a meeting with the governors last Friday, the Government promised to grant a compensating bond in March that, according to sources, would reach 10 million retirees and beneficiaries of the universal allocation per child.

The savings of 60,000 million pesos per year is vital for the Argentine Government since it will be the base for the planned tax code overhaul and the fiscal consensus signed with the governors last November. Those reforms still await the approval of the lower house.

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