Article 1 of the decree establishes “an increase of THREE PERCENT (3%) in Personal Contributions and Employer Contributions, which will be added to the current contributions on the salaries of all workers.” With this adjustment, the contribution rate goes from 16% to 19%.
Additionally, article 2 creates “a personal contribution of THREE PERCENT (3%) for provincial retirees who have accessed the special ordinary retirement, until they meet the requirements established by law for the common ordinary retirement.” This decree was signed by the Vice Governor of Entre Ríos, Alicia Aluani, and the ministers Manuel Troncoso and Julio Rubén Panceri.
Justifying the increase in contributions that will affect both active employees and some retirees, the Entre Ríos government points out the serious deficit of the system, describing it as “solidarity, highly deficient, with an active/liability equation in alarming deterioration, and with a system of increases in mobility that contrasts with the deficit generated by each ladder, in addition to a growing situation of defunding.”
The decree highlights that “in March of this year, the deficit exceeded 18 billion pesos and in April it exceeded 20 billion pesos,” noting that this deficit has increased due to various omissions in the management and obtaining of resources from the Fiscal Pact, which led the Provincial State to take legal action.
In a clear criticism of previous administrations, the decree also attributes the deficit “to the lack of application of Article 14 of Law 8,732, referring to the contributions that the different organizations must make to eliminate or proportionally reduce the deficit produced; and non-compliance with Article 12, subsection ‘d’ of said Law, which refers to the contributions of the special regimes.” The regulations allow the Executive to modify the rates and establish extra contributions for retirees, a prerogative that previous administrations did not use, allowing the deficit to skyrocket.
The decree also cites a diagnosis prepared jointly by the Budget Secretariat and the General Directorate of Fiscal Analysis and Economic Studies, which concludes that “the Entre Ríos Pension System faces a serious sustainability problem due, among other reasons, to the high rate of passivity due to the increase in life expectancy, the increase in beneficiaries, a replacement rate higher than the national one (82%), and a lower minimum retirement age than other systems such as the national one.” The report highlights that the deficit of the Retirement Fund has a high and growing impact on the public finances of the province, since a significant part of it is financed with contributions from the Treasury, made up of taxes paid by all residents of Entre Ríos, regardless of whether they are employed, retired or receive a pension from the province.
