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They warn that the minimum asset will be reduced by 34% if the Government does not pay the bonds

The government of Javier Milei advances with its public spending adjustment plan by cutting and underexecuting budget items in different areas of the State. During the first two months, the retirements They were strongly affected by the impact of bonds and the increase in inflation.

A report made by the Center for Political Economy (CEPA) warns that if the government Milei continues down the path of cutting pensions and stops paying bonuses, there would be a “nominal reduction of there be minimum of 34%”, to which we must add the harmful effect of the strong inflationary acceleration that is expected, which would lead to retirees “to a critical situation.”

According to the study, the twelfth measurement of the retirement update derived from the mobility law approved in 2020which would be applicable from March 2024, would represent an increase in 29.8%, figure which is barely above the 20.4% in January and which, according to estimates, will lag far behind the figure expected for the January/March 2024 period, which would be 60.1% in the quarter.

The document recalls that during the management of the Front of All it was decided to grant bonuses to compensate for the loss of pensions due to inflation. The Milei administration decided to extend the payment of the bonus during the months of January and February 2024 but freezing the amount at $55,000. CEPA considers that the amount should have been almost $100,000 “to accompany the variation in prices in January and February.”

Retirements: the Government plans an adjustment of 0.4 points of GDP

The report also warned about the possibility of the government defaulting on the bonds. “The main concern, however, lies in the continuity or not of the bonus and in the eventual amount in the future. This is because among the items that make up the fiscal adjustment planned by the government, there are 0.4 points of GDP corresponding to retirements,” indicates the report.

If that happened “it would be a reduction minimum nominal asset of 34%which added to the strong inflationary acceleration that is expected, would lead retirees to a critical situation. In terms of pension spending, if the bonus were eliminated, this would imply a savings of 17% of expenses in that area,” the document states.

In another passage of the report, the pension mobility articles initially included in the Omnibus Law are criticized, which were later excluded from the final project that the Chamber of Deputies dealt with.

The study explains that the ruling party’s proposal was push a formula update retirement mobility from April 2024, with the inflation available on that date (February 2024) while the application in March 2024 of the update with the current mobility in force was maintained.

“What conclusions do you derive from this analysis? The first, and most general, is that retirees, although they would not lose from inflation, They can’t hope to beat him either. to the same. They cannot beat you simply because they would follow the price dynamics. But, also, where is retirement frozen so that, from then on, the evolution of prices is followed? Is that level of real retirements reasonable? That junction point did not include January inflation and that meant a brutal drop in income real”, the document states.

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