This week we saw the beginning of the processing of the Fourth Withdrawal in the Senate Constitution Commission. A tense debate, as has been its characteristic since the initiative was proposed in the midst of a pandemic. Now the discussion was divided to review, on the one hand, the withdrawal of funds, and on the other, that of life annuities. Some congressmen have already put out the alerts and anticipated that they will present indications to modify the bill that came out of the Chamber of Deputies.
Once again, we hear the familiar phrases: that it will imply a decline for insurers, that growth will be zero in the next few years. Phrases that have been aligned between the ruling congressmen, the government and the insurance companies. From the Ministry of Finance a few days ago we heard clearly that making this withdrawal “is not necessary” due to the state benefits that are being delivered, such as the IFE. The speech was seconded by Richard Von Appen, president of SOFOFA, who predicted that the country’s growth, due to withdrawals, would be zero. Then, the Commission for the Financial Market warns that this would imply that insurers lose up to 60% of their equity. Institutions that, however, have multimillion-dollar profits every year.
Therefore, the point is, how much do people lose who cannot make use of their resources, who cannot make decisions about them, what is really at risk. We know that this is a measure designed to benefit millions of people who have been economically affected as a result of the pandemic. And, without a doubt, it drags the structural issue of a change to the pension model. You have to go to the bottom.
It is necessary to change our current pension system to one in which the sources of financing are mixed, combining contributions to social security from workers, employers and the State. Understanding that the current pension contribution of the worker is approximately 12%, 10% plus administration costs, our proposal is to maintain this contribution and the creation of a mandatory pension contribution of 6% for the employer, thus both added together reach a total of 18%.
A new pension system must contemplate a Universal Basic Pension for all people regardless of their contributions, that covers, at least, an adequate standard of living for pensioners. This should be close to the minimum wage, but can be defined around the consumer basket, which specifically addresses the needs of the elderly.
And, also, a Contributive Pension that is calculated based on the contribution made by each person in their active life with a recognition of care work, with intra- and intergenerational solidarity, and periods of unemployment are subsidized from the surpluses of the Unemployment Insurance Solidarity Fund, thus existing a social security of pension gaps.
It is essential to consider a New Solidarity Pension Fund, administered by the new public body, which will be complemented with public spending to be defined, and, one part, used to increase the pensions of current retirees and, another, will be saved for future pensions in order to give the system sustainability.
And let’s not forget: this proposal will undoubtedly include the Armed Forces and the police. For an equitable, fair and dignified pension system.
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