Pension reform approved in Uruguay despite union protests

2023-04-28 22:17:31

Finally, the neoliberal ruling party in Uruguay achieved the pension reform with which it threatened during the three years of the government of Luis Lacalle Pou. He raised the retirement age from 60 to 65 and allows, even so, a person over that age to continue working and on the condition of contributing to the mixed regime, between state and private.

The pension reform was one of the battle horses of Lacalle Pou in his crusade to enlarge the pension fund, enrich the Pension Savings Fund Administrators (AFAP) and reduce the volume of tax expenditures destined to pay pensions.

For the president, this system was “very supportive” and that is why it was necessary for Uruguayans to work for more years in a formal way. “More and more taxes are used to pay for the retirement system. The contributions directly involved to social security are not enough to sustain the system, ”he launched.

The approval of the pension reform in Congress

The reform was approved by 17 votes (all the pro-government bench, except one) out of a total of 28 senators. The Upper House made reforms to the text that had been approved by Deputies and now it only remains for the Executive Branch to promulgate the norm.

The text took months of negotiations within the ruling coalition and also with the opposition Frente Amplio, which did its best to make the reform less harsh and ultimately did not support it.

The reform contemplates that the retirement age goes from 60 to 65 for men and women, except in some sectors, such as rural and construction.

30 years of contributions will be needed, and those with 38 years of service will be able to retire earlier.

Those over 65 will be able to continue working, but not in the sector to which they belonged. In addition, they must continue to make contributions of 15 percent to social security.

Immediately after the norm was approved, President Lacalle Pou celebrated the achievement through a previously recorded video. He there he insisted that, currently, to pay a retiree “it is not enough with the contributions of those directly involved to social security.”

He said that “the asset-liability relationship has been decreasing and generating risks” and described the reform as “urgent and necessary” due to “increasingly longer life expectancy and the drop in the birth rate.”