proposes raising the age from 60 to 65 years

by time news

The president of Uruguay, Luis Lacalle Pou, does not want any delays. Knowing that the issue will take up the semester and perhaps even more, his government will redouble its efforts starting this week. to obtain the support of more sectors for his pension reform project. Specifically, it hopes that the most important changes that may be made before sending the project to Parliament, on a date not yet decided.

The head of state presented the document last Wednesday to his allies in the official coalition. This Saturday, in a strong political gesture, Lacalle Pou visited the opponent’s headquarters Broad Front (FA) to deliver the draft of the initiative to its leadership.

Its basic task is to achieve the greatest possible consensus on a far-reaching reform that is a matter of State and that the most important modifications are made before its parliamentary debate.

The draft of the reform -which will include all the savings banks- raises the minimum retirement age to 65 of its current 60 years with a base of 35 years of contributions, although it does not cover all workers: rural workers and construction workers will have an exception, based on occupational risks, and their age would not increase.

The retirement age of people born before April 1, 1966 will not change and the new system will start with those born in 1967.

President Luis Lacalle Pou with the leader of the Broad Front, Fernando Pereira. AFP Photo

Problems

The technical services of the government estimated that the most relevant impacts will begin to be seen as of 2030, in order to mitigate the deficit of the system that, towards the end of 2021, It was about $600 million.

In turn, the Executive established a period of 20 years so that all savings banks progressively converge towards a Common Retirement Regime designed on the basis of the “principle of equality”.

According to Rodoldo Saldain, the president of the Social Security Experts Commission that designed the project, the idea is that the new system “must maintain the current coverage, improve its sustainability and ensure generational equity”. For Saldain, “the increase in the retirement age is inexorable in Uruguay.”

The problem is that, while the birth rate is declining, the life expectancy of Uruguayans is increasing. Both trends cause the aging of the population: “The only group that grows, both in relative and absolute terms, he is the oldest”.

If this keeps up, almost a third of Uruguayan society will be over 65 years old in 2070twice as much as today. A challenge, a risk, a problem that compromises the current social security system from the government’s point of view.

Luis Lacalle Pou took his reform project to the Broad Front.  AFP Photo

Luis Lacalle Pou took his reform project to the Broad Front. AFP Photo

Reform

Reform will take effect five years after to be approved with a transition regime towards the age of 65. In this way, if it is approved this year, those born in 1967 will retire at 61 in 2027. Those born in 1968 will retire at 62 in 2029; those from 1969 to 63 in 2031; those from 1970 to 64 in 2033 and those from 1971 to 65 in 2035.

In turn, the Executive established a period of 20 years for all savings banks to progressively converge towards a Common Retirement Regime for all designed on the basis of the “principle of equality”. There are currently several in force: the BPS (industry, commerce, civil, rural, teachers), the Police Fund, the Military Retirement Service, the Notary, the University Professionals and the Bank.

Within 20 years there will be a pension system common to all the boxes.

This new common system would have two components: one in solidarity (distribution, as was historical until 1996) and other capitalization individual savings (AFAP), for all sectors, which will apply to new workers.

It is sought that all Uruguayans have the same rules regardless of the “box” to which they contribute, although recognizing the differences that have a solid and proportional foundation.

The proposed reform establishes a universal benefit for all people over 70 who cannot justify a retirement cause due to lack of work history, contributions and years of work, among other problems.

The project draft also proposes a global increase in minimum pensions and that no person earn less than what is projected now. “The most vulnerable are going to earn significantly more than what they earn today and those with the lowest income (the first five income deciles) will have a higher benefit than the current one,” the government will base.

Lacalle Pou has said that the reform is “good” and that the population will understand the need to approve it if the urgency that the country has to find a solution of this nature is correctly explained to them. According to a survey conducted by the Executive, 70% of Uruguayans believe that the pension system should be reformed and many see that it is unfair.

The president has also said that the reform is necessary because what is at stake is the future of the “children” of this generation and that the opposition should support it because the main leaders have already expressed the urgency to modify the system.

Once the text is known, the government will try to convey that the reform extends rights and that it tries to ensure that the “backpack” that future generations must carry is not so heavy.

Source: AFP, EFE and Clarin

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