The cost of the BPS to equate pensions to minimum wage would increase by US$ 1.05 billion
The president of the institution, Alfredo Cabrera, said that “it is impossible” to sustain the Uruguayan retirement system without the pillar of individual savings.
The Social Security Bank (BPS) released in the last few hours a projected calculation of the increase in costs that the institution would have if the social security plebiscite, which will be submitted to public consideration on October 27, is approved.
The work, which was recently presented, took into account only one of the proposals on the ballot: that of equating minimum pensions with the national minimum wage.
The president of the BPS, Alfredo Cabrera, stated that if the constitutional reform is approved, there will be “an aggravation of the projected deficit.”
He said that “the projected figure would go from 2% to 8%. It would imply an increase to finance it from the Value Added Tax (VAT) or from contribution rates (whether personal or employer). Or from assistance from the Central State. These are the numbers that emerge from the reports made by the technical services of the bank,” Cabrera said at a press conference.
Along these lines, the leader pointed out that the social security system in force in Uruguay is the one that began to be applied in 1996, when the individual savings system was incorporated, one of the pillars that the initiative promoted by the Pit-Cnt and some sectors of the Frente Amplio proposes to eliminate.
“Let’s be clear. The plebiscite is not against the reform that the government made last year. It is against the system that Uruguay created in 1996 and seeks to end the individual savings system. Ending the individual savings system in a country that has a very low fertility rate and a very low asset-liability ratio is impossible. The only possibility we have of having a system that can pay pensions and maintain its financing is with the mixed system,” argued Cabrera.
For his part, the vice president of the BPS, Daniel Graffigna, told Montevideo Portal The report prepared by the institution’s technicians calculated that just equating the benefits and pensions that are below the minimum wage to that amount would cost approximately US$1.05 billion per year.
The Yes ballot to reform article 67 of the Constitution proposes, in addition to the prohibition of the individual savings system (the elimination of the AFAPs and the creation of a trust with the funds they manage), that “no retirement or pension be less than the value of the National Minimum Wage,” currently at $22,268.
In addition, the “right to access retirement benefits at 60 years of age and 30 years of service” is established.
