The Macri administration’s new plan to pay retirees’ pension funds, which was presented in Congress today, is already facing some criticism. After the government announced it would seek to be able to buy and sell shares that would otherwise fund retirees’ pensions, the opposition came out to say it is staunchly against the government being able to meddle with those shares, as it fears that money destined to retirees could end up in the hands of corporations instead.
Speaking to Vorterix Radio today, National Social Security Administration (ANSES) head Emilio Basavilbaso said that although there was no “plan” to sell ANSES shares since a law passed by the previous administration prevents the current government from doing so, what the Macri administration wants is to “gain flexibility to buy and sell shares because if the value of the shares goes down and we cannot sell them, that makes us a bad investor. If it is necessary to sell them in order to finance retirees’ pensions, that’s what we’ll do.”
Last year, under former President Cristina Fernández de Kirchner, Congress approved a law stating that in order to authorize selling those shares, the approval of two thirds of Congress is needed. The government’s “mega project” bill regarding retirees also seeks to modify that law.
Let’s have a look at what these shares are. The shares are from the Sustainability Guarantee Fund (FGS) created in 2008 as a guarantee (yes, it’s in the name) that retirees’ pensions would be paid. However, its revenue is not solely destined for ANSES. It’s composed of shares from 46 companies that are valued at around AR $90 billion, according to official estimates. The shares were inherited by ANSES when private companies known as AFJPs that administered retirement funds back in the ’90s were nationalized and include companies such as the Clarín Group, Edenor and Alto Palermo.
Basavilbaso has been careful to stress that the government will not sell the shares unless it is necessary:
“We are not going to sell them unless it would maximize the value of the FGS,” he said.
The FGS is one of two sources that the government hopes to use in its “mega project” proposal to pay for retirees’ pensions, which have historically been far below what retirees need to live comfortably and has thus led to untold numbers of lawsuits against the government. The other money source is a proposed tax amnesty, which would bring in undeclared Argentine assets from abroad.
“We have to take care of the FGS because Argentina is currently undergoing a demographic transition […] Making structural changes to the FGS would be a step back,” said Diego Bossio, head of the Justicialist caucus in the Chamber of Deputies and former ANSES head.
The opposition is against selling the shares on the grounds that doing so would deplete the FGS’s funding (and pension funds are not exactly overflowing right now). However, as we said, Basavilbaso maintains that holding onto “bad” shares isn’t a good alternative. It should also be noted that FGS funds are not solely destined for ANSES, but also to other social benefits, so it will probably become a sticking point in the discussion.
Another part of the bill that is causing controversy is a proposal to create a Universal Pension for the Elderly, which would be for people over the age of 65 who do not receive a pension or who receive a social benefit that is lower than the Universal Pension, in which case they would have to choose between the two. However, since women’s official retirement age is 60 (as opposed to men’s 65), that leaves them potentially unprotected for five years.