Argentina was in the penultimate position in an international ranking of pension systems
Argentina obtained the penultimate place in the 2021 World Pension System Index carried out by the Australian consultancy Mercer Institute. The data determines that the Argentine pension system is among the worst in the world, given that out of a total of 43 nations surveyed, our country qualified in category D in which the report warns that it is “a system that has some desirable characteristics, but also has important weaknesses and/or omissions that must be corrected. Without these improvements, its effectiveness and sustainability are in question.”
In the first position is Iceland, with a total score of 84.2, in contrast to the 41.5 obtained by Argentina, which only surpassed Thailand (40.6) by 0.9 points among the countries analyzed.
Argentina appears far from the score obtained by the rest of the Latin American countries analyzed: on the podium is Chile, with 67 total points, followed by Uruguay (60,7), Colombia (58,4), Peru (55), Brazil (54,7), Mexico (49).
Compared to the previous year, the country worsened its rating, going from having a total score of 42.5 in 2020 to 41.5 in 2021, “mainly due to a reduction in home ownership,” the report explains.
According to official information on the Mercer Institute Latin America page, the index “compares retirement income systems around the world and highlights some deficiencies in them, and suggests possible areas of reform that would allow offering more adequate retirement benefits and sustainable”.
The country worsened its rating, going from having a total score of 42.5 in 2020 to 41.5 in 2021.
Among the suggestions to improve the pension system, the Mercer Institute indicates that the country should increase the coverage of employees in professional pension plans through automatic affiliation or enrollment in order to increase the level of contributions and assets.
In addition, they recommend adding a minimum level of mandatory contributions to a retirement savings fund, a minimum age to access the benefits of private pension plans, and improving the regulatory requirements for the private pension system. The AFJP system was eliminated in 2008 by Kirchnerism.
Among the edges on which the report is based to build the total score, is the level of adequacy, sustainability and integrity of the pension systems in each of the countries.
The first sub-index, which assesses how adequate the system is based on the needs of the population, is determined based on the benefits it provides based on its design, the level of savings it generates, the proportion of retirees who have a home ownership, government support and growth assets.
The sustainability of the pension scheme is measured based on the level of coverage of the system, the total assets it has, demographic growth, public spending, government debt and economic growth.
Finally, integrity is determined by the regulatory compendium that governs it, the level of governance, how it is communicated, and the operating costs it records.
In a publication entitled “The decline of our pension system”, the defender of the Third Age, Eugene Semino, referred to the Mercer Institute report and said that “the sustainability of the pension system is one of the variables that must be outside of any political contest”.
“What is needed is not a bonus or an increase, it is a structural reform that is sustainable in the long term,” said Semino, adding that “the country’s economy depends on the mode of operation and financing of the pension system. If this is effective, it contributes to sustaining, and reproducing through consumption, a good standard of living for the entire population, not just for retirees. If it is inefficient, it tends to multiply inequality and poverty, especially in a country with chronic economic crises”.
And he concluded: “These are the things that generate the daily sensation of our decadence. The comings and goings of local politics, the picturesque declarations and theatrical fights of our politicians, are the noise that does not let us hear these types of signals. It doesn’t matter who gets to govern and who gets to be the opposition, the sustainability of the pension system is one of the variables that must be left out of any political contest”.