“Social Security in Argentina. Past, present and futureIt is the new book by Hugo de Bertin (Editorial Board, 2022).
Burton holds a degree in Economics from UNLP and an MA in Political Science (cum laude, honours). Currently Professor for the Postgraduate Course in Social Security Economics in the Master’s Program in Provincial and Municipal Public Finance since 2017 and in Applied Topics Public Expenditure (Social Protection) in the Master in Public Policy since 2021, both in the Faculty of Science • Economics from UNLP and Social Security Finance Majored in Social Security Law at Rosario National University. He is the author of publications on social security issues and political science in national and international journals.
Below is a preview of his new book.
Technical design for pension reform
Argentina has more than two hundred different retirement bases at the national, regional, municipal and private levels. In general, subsystems other than SIPA provide a better relationship between effort to contribute during active life and perception of benefits during passive life.
However, in most cases, these discrepancies do not reflect disparate risks in related work activities (strenuous, risky or unhealthy), but rather reflect the ability of these groups to achieve more beneficial rules than those implied by SIPA. These schemes, in general, are not self-financing, because the income from contributions and contributions is not sufficient to pay these differentiated benefits. Therefore, they end up affecting the equity, efficiency, and sustainability of Social Security.
In the future, it is possible to consider creating a single pension system for citizens and strengthening tools to address some of the differences between the mentioned groups. The joint pension system may be a critical step in eliminating the aforementioned inequalities. Desirable improvements in the replacement rate between retirement and salaries can be financed through voluntary, group and individual savings programs, but without state guarantees, as they increasingly work in other international experiences.
The individual pension system consists of four pillars: the first, non-contributory, aimed at alleviating poverty in old age, which will be exemplified by the current PUAM system financed by tax resources; The second pillar will operate as a pay-as-you-go system, aiming to maintain consumption patterns in old age, with an advantage commensurate with the years and social security contributions made during active life; The third and fourth pillars will be voluntary, with the aim of improving the replacement rate, through voluntary collective and individual savings without state guarantees.
The introduction of these tools must be accompanied by other adjustments to enhance the sustainability and transparency of social security in Argentina.
The political economy of pension reforms
Pension reforms are a recurring process around the world that involves social and political struggles. In 1993, a comprehensive reform was carried out in Argentina (frontier and structural with the implementation of two competing systems: individual capitalization and distribution), and in 2008 the so-called “counter-reform” was structural and the capitalization system was abolished. An individual .
Lessons can be learned from both to reach a better consensus when embarking on a new process of change.
In 2002, the National Executive, through Decree 1934/02, held an intersectoral dialogue, with the participation of national and international experts, the results of which were reflected in the “White Paper on Social Security”, which represents a valuable background for building the structure of the political economy of the pension reform.
The way is dialogue and the search for consensus between civil society actors and political parties to promote reforms that allow reconciling economic growth and social protection, noting that the starting point is the delegitimization of social security that exists among citizens, many of whom do not expect today to be able to ” Living after retirement.
The political economy of reform in this context is as important as artistic design.
- Protection reform for the elderly must emerge from a broad and well-founded debate that will allow agreement on sustainable social protection reform over time.
- It should gather the different opinions of sectors of civil society (unions, companies, associations of retirees, universities, national and international experts, study centers and international organizations, among others) on how and how they see the state of social security in Argentina. Imagine the changes to strengthen it.
- It must combine technical consistency, financial cost savings and political feasibility.
- It is necessary to include the debate on reform in a political and social agreement because of the costs associated with it and to give it predictability in the medium term at the local and international levels.
It is convenient to have an executive report with the associated actuarial and financial proposals and projections, which are made by a panel of experts, even with more than one opinion, as was done in the pension reform processes in Spain in 1995, in the UK in 2006 with The Turner Report, in Chile in 2008 and 2015 and how this is happening in Uruguay’s pension reform.
The national issues mentioned included various differences in composition, working patterns and duration of assignments to the respective expert groups.
Thus, in the cases of Spain and Uruguay, the commissions brought together representatives of the government (by a majority), opposition political parties, and intermediary organizations of workers, employers and pensioners.
In contrast, in the Chilean model, representation was in charge of national (2006) and national and international (2015) technical experts.
In the United Kingdom, the committee was made up of three members appointed by the Prime Minister, the Treasury and the Secretary of State for Work and Pensions.
In Spain, the Toledo Pact continues to operate and provides general recommendations or guidelines, every five years, on the functioning of the pension system. These are dealt with by the Social Dialogue Body (made up of three parties, governments, unions and business), which formulates the most specific and tangible aspects of implementing the general guidelines contained.
In France, a permanent commission, Conseil d’Orientation des Retraites (COR), was created in 2000, consisting of 41 members, representatives of Parliament, professional and trade union organizations, retirees and families, members of the public administration and experts. Depends on the prime minister. COR is an independent and pluralistic advisory body, responsible for the analysis and supervision of the medium and long-term perspectives of the French pension system.
In all cases, these working groups have hired technical secretariats made up of officials from the relevant ministries.
Regardless of the form adopted for the composition of the Panel of Experts, the Technical Report of the Pension Reform Proposal is a useful tool so that it can be evaluated in Congress.
The technical report should contain a documented and updated diagnosis of the state of the pension system, its strengths and weaknesses, as well as proposals for change and its impact on pension coverage and public finances in the short and long term.
A unified pension system for all citizens, in accordance with constitutional principles, would enhance efficiency, equity and financial sustainability. At the same time, a better balance of spending must be allowed between the first and third phases of people’s life cycle and prepare us to face the process of population aging.
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