A retiree with the minimum would have to pay an amount of $452,000 these days to compensate for his accumulated loss of purchasing power in the last five years. The figure is equivalent to 6.7 minimum retirements from 2017, in terms of purchasing power. This is the main conclusion of a private analysis regarding the evolution of pension assets adjusted by the mobility formula, modified at the end of that year and modified again in December 2019, compared to inflation. The calculation computes the successive extraordinary bonuses that the State granted over the last five years to, precisely, alleviate the delay in the income of retirees.
The counterpart of those almost seven minimum pensions that the beneficiaries lost is the State savings which, according to the report, amounted to the equivalent of $106 million in minimum benefits.
The Wall Street crash and farm pesos boosted the dollar and hit bonds and stocks
The official dollar devaluation rate began the month at 6.37% per month and is gradually slowing down day by day
Under the current mobility formula, the loss of purchasing power of pensions is the product of salary delays associated with high levels of inflation, which have accelerated in recent months. According to the projection of the economist in charge of the report, the director of the Argentine Institute of Fiscal Analysis (IARAF) Nadín Argañaraz, in the sixty months between December 2017 and December of this year, average monthly retail inflation is around 3.8 percenta level that has eroded the purchasing power of the social sectors with fixed income, mainly retirees and pensioners, wage earners and allowance recipients.
Particularly in the case of retirees and pensioners who earn the minimum salary, currently $60,124 per month and who, to have the same purchasing power as they had in December 2017, should be earning $67,499.
That is to say that the credit of December has a real loss of 11% compared to the credit of December 2017, which means that if you wanted to recover the purchasing power of the month of December at that time, you would have to increase the minimum retirement 12, 3% and, from there, keep pace with inflation.
What are the four doubts that worry investors, who prefer to cover themselves with dollars
As often happens in times of uncertainty, the pesos seek refuge in any of the variants of the US currency.
The data worsens if the comparison is made with the annual income. Then, the real loss in 2022 compared to 2017 is 19.3%is equivalent to 2.3 minimum assets.
If the credit were increased by 24% and remained in real values throughout 2023, it would ensure that retirees would maintain the purchasing power they had in 2017. But that, Argañaraz assured, would not compensate for the “accumulated” purchasing power lost in the last five years.
According to the economist, the accumulated loss in the last sixty months is 9 assets. This means that The 60 salaries collected were equivalent to 51 salaries with the purchasing power of 2017.
Markets: Argentine stocks and bonds traded higher and resisted the negative trend of Wall Street
The S&P Merval rose 1.8% to 171,177 points and dollar bonds gained 2.9% on average, with a country risk that was close to 2,300 points. New York indices fell as much as 0.5%
The payment of compensatory bonuses mitigated part of the accumulated loss. Specifically, considering all the bonuses granted up to now, the loss is reduced to 6.7 assets. That is to say that the accumulated loss, net of bonds, is today 6.7 assets. In each of the years, the purchasing power of retirees with the minimum was less than what they had in 2017.
In pesos of December of this year 2022, the compensation that a retiree should receive to recover what they will end up losing this year compared to 2017, is $94,000. If you add to that the losses in each of the other four years, the total amount comes to $454,000. This means that if it were decided to compensate retirees with the minimum for all the purchasing power lost from 2018 to the present, they would have to pay $454,000 each. Under a base of 3,200,000 retirees with the minimum pension, the total amount to be paid would be $1.45 trillion.
The other side of the loss of retirees is the money the State has saved, both during the current government and the previous one. If the reference of 2017 is taken, the fact of paying pensions with less purchasing power, generates less real spending.
In 2017 the total amount of pensions paid was $10,247,000 million. In each of the remaining years, the total amount was less, due to the aforementioned actual loss. This year, 2022, a total of $8,644,400 million would end up being paid, that is, almost $1.6 trillion less than in 2017.
If the savings of each year are added, a total saving of $6,373,989 million is obtained, a very significant figure. The total amount of money saved by adjusting real pensions downward is equivalent to 106 million minimum pensions. From 2019 to the present, more than 20 million minimum pensions were saved per year.
Keep reading:
