Argentina’s ruling party approved a controversial pension legislation on December 19 despite violent protests which left at least 100 injured. After more than 12 hours of debate, 127 voted in favor while 117 were against the bill.
The new law will reduced pension payments to individuals. It will also move the retirement age from 65 to 70 for men and from 60 to 63 for women. Another change is that the calculation for pension benefits will be determined by inflation, instead of wage growths and tax contributions.
President Mauricio Macri said the changes were needed to lower the deficit and attract foreign investment.
This 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.
Macri is a conservative who was elected in 2015. Since taking office he promised pro-market reforms which includes austerity measures to revive the economy.
His administration say that the reform will save the government roughly 60 billion pesos ($3.4) billion per year, which amounts to 0.4 percent of the country’s gross domestic product, as reported by The New York Times.