Despite significant domestic and international concerns, the Argentine government has now made official its elimination of the country's private pension system. The Argentine legislature passed Ley 26.425 on November 20, 2008 and President Kirchner signed the law on December 4, 2008, establishing instead an Argentine Integrated Pension System (SIPA) to replace the current capitalization regime as of January 1, 2009.
The new system provides that two commissions will be created to function within the existing national social security system (ANSES): a bicameral one containing members of the majority and opposition parties, and another with representatives from the country’s labor unions, businesses, private banks, and retiree groups. Under the new law, the System will be financed through distributions to affiliates and beneficiaries, and it guarantees terms equal to or better than those previously existing under the private system.
Annuity payments will continue being paid through participants’ existing retirement insurance companies. Affiliates’ voluntary contributions to individual capital accounts may be transferred to ANSES accounts if it is determined that such a move would be beneficial. The new law, however, prohibits compensation corresponding to retirement and pension administrators from exceeding certain levels. Steps will be taken to ensure employment for certain medical, technical, and administrative workers affected by the change.
The law also provides for a SIPA Sustainability Guarantee Fund to create structures for sustainable economic expansion of the national economy, the growth of remedial funds set aside for SIPA, and the preservation of the Fund’s assets.
For a copy of the new pension law, please click here.