Argentina passes pension takeover

State says move to take control of $24bn in private pensions will protect retirees.

    The pensions bill will be sent to the president to be signed after being passed by congress [EPA]

    "It's a cultural change. The measure returns the state to its role as guarantor of social security."

    Kirchner has argued that the privatisation Argentine pension funds in 1994 was responsible for "42 per cent of external debt" and played a large part in Argentina's default on its international debt obligations in 2001.

    About 9.5 million workers - of whom only 3.6 million pay meaningful contributions - are covered by the affected funds which lost 17.5 per cent of their worth, about $8.1 million, between October 2007 and October 2008, according to the government.

    'Precarious'

    Gerardo Morales, the Social Democrat leader who voted against the measure, warned that the nationalisation bill "is precarious, impinges on privacy rights and really addresses the state's ability to deal with an eventual loan 'default'."

    Opponents of nationalisation have said the money from the funds could be used to pay off the national debt, which stands at about $150bn.

    Argentina faces debt payments of about $20bn in 2009, only $8bn of which is accounted for in the government's financing programme.

    In an attempt to counter criticism of the plan, Fernandez has agreed to create a commission that includes the political opponents to oversee how the money is invested.

    Polls show that a majority of Argentines support a state-run retirement system complaining that the private schemes charge high commissions and offer lower returns.

    But the move has caused panic among investors, sending Spanish stocks and Argentina's MerVal index plunging in October when it was announced.

    SOURCE: Agencies


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