Image: @marnedelcu

In the last few hours, a new version of the Omnibus Law project emerged, with which they would try to pass a change to the retirement mobility formula. This is a new attempt to rob retirees that aims to guarantee the adjustment plan. The latest formulation maintains the updating of pensions until March as it currently works and, starting in April, it would increase monthly in accordance with inflation. What’s behind this?

The robbery in three parts

Luis Caputo y Javier Miley They want to pretend that they will “take care of the retirees” by proposing a change in the formula adjusting salaries for inflation starting in April, but in reality it is a new theft, since they will do it once a new reduction of pensions to levels of greater misery. In this way they will keep purchasing power at the bottom, with no possibility of recovery.

He new robbery of retirees can be analyzed in three related parts to the form of updating of assets. The change maintains the updating of pensions according to pension mobility in March and, starting in April, it would be monthly in accordance with inflation.

The problem is that on the one hand They take advantage of the shortcomings of current retirement mobility and the discretion in charge of the Government of the day. This allows them to make a inflationary shock to liquefy retirements exacerbating the problem, and freezing bonds below inflation. These losses that will be made between December and March will not only not restore them but will be the basis for the tax savings they are looking for.

At the moment that the formula could make some recomposition (the delayed effect of mobility is at least 3 months), on the basis of pulverized retirements since they erase the January inflation and apply the February inflation with a 2-month delay, which They tie it to inflation, and they sell it to you so they don’t continue losing. But the devil, Caputo and Milei, are in the details and The idea is actually to put a ceiling on these new and lower pensions so that they can no longer recover.

Theft 1: freezing of the bonus, they pay you 2 pensions instead of 3

The first impact has to do with a loss equivalent to an entire month of retirement between December and February. This is due to having an update delayed by 3 months. The formula is adjusted with 50% of the increase in salaries or RIPTE between October and December and another 50% with the interannual tax collection of the last quarter of the year. That is why it is an adjustment that has an important lag effect: in March the information until December is only used, the enormous inflation that we are going through and are going to have between December and February, will be between 75% and 85% (using including the information disseminated by the Government through the REM), while the minimum retirement will remain unchanged.

Only in March would pensions be updated according to the current formula, but the loss of income in these 3 monthsassuming they will keep the $55 thousand bonus It will be around $150 thousand for those who receive the minimum retirement. If during 3 months of high inflation they pay you the same, each time you have enough to buy less and someone is losing that differential: it is the retiree.

Theft 2: they skip the adjustment at the time of maximum inflation

The second impact is related to a structural theft, a new starting point. Because the idea of ​​the law is to modify this aspect so that it is then monthly, it leaves a new base well below. The mobility update will be around 30/35%while the inflation in the same period will be 70/75%. That inflation differential will be lost to make a “blank slate.” The estimate indicates that the new salary base will be between 23% and 30% lower (in real terms) to the already misery that was exacted in December 2023.

In this way and putting together various scenarios we can see that if they maintained a bonus of $55 thousand in March, the retirement would go to $191 thousand, while if the assets were updated based on inflation estimated at 70% (according to what REM published) , should be at $273 thousand. This gives a base loss of almost 30% in just 3 months. Consolidated to the loss of the last 8 years, we are talking about a 50% drop in the real minimum retirement.

If the bonus were adjusted for mobility (an estimated 30%), the retirement would be worth $207,000. In that case the loss would be 24%. The drop in the purchasing power of assets in the last 8 years would be 45%. If they even wanted to take out the bonus and leave everything based on the formula, the loss in 3 months would be 50%, while the accumulated loss in 8 years would be 64%.

Finally, and in the case of a retiree who is at $300 thousand today, the retirement will be valued close to $387 thousand, while the same adjusted for inflation should be $509 thousand. A loss of 24%. In case you want to know how much your retirement should be if it had been adjusted for inflation in recent years: a loss of 66% in real assets is observed.

As we see in the different scenarios, in just 3 months the loss would be around 25%.

Robbery 3: the possible withdrawal of the bonus

A third impact is related to the discretion of the bonuses. This is not new, but rather a continuation of a practice that the Government of Alberto Fernandez accustomed us to. The last minimum retirement payment was $160 thousand, of which 34% had a discretionary bonus. This allows the Government of the day to have enormous discretionary power that in times of high inflation allows the adjustment to fall more heavily on retirees. This point still remains a great unknown, since if the bonds are not maintained, retirement would fall even more and if they are maintained, what will they be like? As can be seen, it is a still open scenario because the Government did not provide details about the bonds.

Lastly and as fourth aspect of theft, there is the flattening of retirements. There are a large number of retirees who today do not receive that bonus, which causes the loss of assets to be even greater due to the same result of inflation. Eugenio Semino observes that there are 2.5 million retirees who, by not receiving a bonus, today are receiving close to the minimum (between $160 and $170 thousand pesos), added to the non-contributory pensions, it is clear where the adjustment wants to go.

However, we are not discovering anything here. It is consistent with the recorded message that Caputo gave a month ago. With the objective of reaching zero (financial) deficit, The Government is seeking a cut of 0.4% of GDP.

In this framework, the Omnibus Law also incorporates the possibility of selling the Sustainability Guarantee Fund (FGS) to make money and get the dollars. Perhaps they will be used to pay debt, perhaps it will be part of a financial architecture to move towards dollarization as Caputo said a few months ago, among other options. What is certain is that They are not going to use it to alleviate a truly emergency situation such as retirement benefits.. On the contrary, retirees continue to bear the burden of the adjustment. As Alberto Fernandez said, between the banks and retirees, I’ll stick with the banks. Or was it the other way around?

That is why it is very important not to be indifferent. The DNU and the Omnibus Law are part of a huge attack on the living conditions of working people. More than ever on Wednesday we have to be on strike and mobilize to stop the Government and in rejection of the DNU and the Omnibus Law.


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