The Executive Power defended this Wednesday with a multiplicity of graphs and numbers justice and the need for the proposed reform of the social security system, in what was the first step in the parliamentary discussion of a bill that will define this government.
Led by the Minister of Labor, Pablo Mieres, representatives of various ministries and entities spoke during the first effective session of the special commission set up in the Senate specifically to analyze the extensive articles.
There the lawyer Rodolfo Saldain, former president of the “commission of experts” that designed the reform and drafter of the project, presented before the legislators an extensive documentary report about the expected impacts of this initiative. Especially with regard to the level of global pension spending and the deficit of the system itself once the reform takes effect.
The report, accessed The Observer, points out that in the medium and long term pension spending breaks its growth trend and stabilizes. In the case of the deficit, the projections indicate which would stand at 1.8% of the GDP also in the medium and long term, instead of going towards 5% of the product, as the Executive expects to happen if the reform is not approved.
The government representatives once again signaled their willingness to incorporate the “contributions” to the project that originated in parliamentary debate. In any case, Mieres made a precision: the proposed law is a system, which has a “internal logic with all its interconnected pieces”. The message of the Executive Branch – endorsed by the National Party bench – is that the modifications that are incorporated do not alter the spirit or the logic of the initiative.
The presence of the authorities in the commission came at a time when from the union representation before the Social Security Bank (BPS) A highly critical report was released on the impact of the proposed reform on future pensions.
That study, prepared by the Workers’ Representation Team (ERT) headed by Ramón Ruiz and who agreed The Observer, ensures that as the transition period progresses – especially after 2043, which is when the proposed regime will begin to be fully in force – reductions in salaries become increasing at all salary levels.
Several examples are cited there. Thus, if a person who today retires at age 60 with a pension of $36,700, would go on to retire at age 65 with $28,400, which would represent a 23% drop in his or her retirement assets. For the most submerged salaries, the report assures, the reduction is below 10% and deepens as the salary grows. For income between $60,000 and $70,000, the differences reach levels close to $20,000, representing a drop in retirement assets of close to 38% in certain cases.
The report was forcefully refuted by the Labor Minister, Pablo Mieres. “We do not know where Mr. Ruiz gets those numbers, they are absolutely false and do not correspond to reality,” he assured.
The minister recognized that it is a fact that with the reform the retirement age will increase for those who are now under 50 years of age, but he denied that pensions will go down. “It is clear that the replacement rates, the retirement assets, will never be lower than the current ones,” he guaranteed. “What’s more, in the middle of the lower pensions they will probably be higher.”
Mieres argued that it is a necessary and fair reform that promotes equity, both with regard to people who have lower pensions and in the search for convergence in the parameters that exist in the different regimes.
The Minister of Labor recalled and ratified the commitment assumed by the government coalition during the electoral campaign: “we are looking for a future for the younger generations,” he assured.
