That is something cold in the back ... whereas according to a report by the Office of Congressional Budget (CBO) published recently, public and private retirement in the United States have shrunk by around 2,000 billion dollars last 18 months, the Argentine president Cristina Kirchner announced Tuesday the nationalization of the private pension system. According to the Government, this measure is justified by the international financial crisis. ( Finance Information City )
The opposition for its part considers this operation as the confiscation by the state of some 30 billion dollars.
The government explains this drastic action by the need to save water dozens of management companies of pension funds (AFJP), when they face losses estimated at about 20% generated by the international financial crisis.
But opposition to the leftist Peronist government of President Kirchner in turn denounces confiscation of these funds, in order to ensure funding requirements for future debt service, which will reach some 40 billion dollars in 2009 and 2010.
The chairman of one of these funds, Horacio Lopez Santiso, also denounced the initiative, calling contributors to complain to justice. According to him, this measure is part of a continuing strategy of the Argentine government faces "problems cash.
The Merval index of the Buenos Aires Stock Exchange plunged Tuesday from 10.69% to 1050.15 points at the meeting in negative reaction to the draft government nationalization of private pensions. "The market is shocked by the drastic change of rules regarding pensions. This is a confiscation of private capital funds," said Luis CORSIGLIA, operator of a market society.
This nationalization has however received support from the largest Argentine union, the CGT, close to the government. "Nothing can better guarantee the payment of pensions to workers than the state," said the secretary general of the CGT, Hugo Moyano.
If this is accepted by the Argentine parliament, called for action, it will allow the government to get their hands on an annual flow of some 15 billion pesos (3.5 billion euros) contributions and some 30 billion investments, including treasury bills Argentina. Some 9.5 million people are affected, although only 3.6 million of them actually contribute to these pension funds, according to industry figures.
Eight of these ten companies managing pension funds are in the hands of private banks while the other two depend on a cooperative and a public bank, Banco Nacion, an entity the largest bank in the country.
Argentina has until 1994 a National Welfare socialei based on a pact of solidarity which pension fund assets.
But gradually the reform inspired by the "new orthodoxy of foresight" which advocated the World Bank took place. According to this view, the schemes were economically inefficient and socially unjust. It was then proposed to replace them with a program of retirement savings in bank accounts of individuals.
A mixed system was put in place in practice, leaving a residual role in retirement pay and opening the door to Administradora de Fondos de Pensiones y jubilaciones (AFJP, pension funds).
A majority of Argentines supports this reform, encouraged in this by the crisis in public pensions, "publicity" by the state, pressure from businesses and promoters of AFJP who will stop at nothing - Or almost - to attract the sheep, promising paradise to those who assign their dues to banks.
But officials of the AFJP spéculèrent market, causing adverse consequences for employees.
The implementation of funded pension scheme has resulted in a parallel increase in the number of Argentines not covered. In 2003, according to a World Bank estimate, 35% of people over 65 or not receiving retirement or other pension. In 2025, then announced projections, this figure should reach 56%.
This situation resulted from high unemployment and a recourse to work, but also by the 1993 reform, encouraged by the World Bank itself, which pushed five-year retirement and made the switch duration of activity needed 20 to 30 years.
The government of Néstor Kirchner then found himself forced to intervene, introducing a moratorium in 2004 which will benefit about 1.5 million of Argentines and allowed more than 80% of the population age to retire from covered.
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