Argentina's Pension System Evolution: From AFJP to SIPA and ANSES Functions

History of the Argentine Pension System

Historically, Argentina utilized a dual retirement system: public distribution (ANSES) and private capitalization (AFJP).

Early Milestones and Generalization Attempts

• 1800s: Early pension systems existed.
• 1877: Government established precepts for teachers' pensions.
• 1909: Specific regulations for teachers.
• 1920s (Avellaneda): The 1884 Ley 1420 included a failed attempt at generalization.

Generalization failed because employees resisted due to salary deductions, and employers resisted paying contributions.

Perón's Government and the Distribution System

The Perón government generalized the system. Contributions were paid to the state, which managed the funds and paid pensions. This system was based on solidarity.

• 1954: Implementation of the Reparto (Distribution) Regime. Current assets paid current liabilities (pensions), with the expectation that future assets would cover new liabilities.
• 1958: Introduction of the 82% Mobile Pension Rate (82% Móvil). This meant that if the salary of the active worker (asset) rose, the pension (liability) also rose, ensuring the pension remained high relative to the salary base.

The Menem Era and System Changes

The Mixed Regime (Public and Private)

The Menem government established a Mixed Regime:

• Public Component: Distribution, managed by ANSES (based on solidarity).
• Private Component: Capitalization, managed by AFJPs (Pension Fund Managers).

Retiree Lawsuits and the “Bocones”

During the Menem administration, retirees began suing the state. The government paid these debts using public bonds (titles) maturing over 10 years. These instruments became known as “Bocones.”

System Reunification: SIJP to SIPA (2008)

In 2008, the systems were reunified. The SIJP (Integrated Pension System), which included the private component, was unified into the SIPA (Sistema Integrado Previsional Argentino).

Current Retirement Requirements

Standard requirements for retirement:

• 65 years of age.
• 30 years of service.

The Role of the State in Social Security

Social security is an inescapable duty of the state because the state is responsible for the welfare of its people. If social security is administered by private companies, they may operate primarily for their own convenience. The state ensures citizens have a good quality of life in retirement.

Dependent vs. Autonomous Workers

The key difference relates to economic dependency:

• Dependent Worker: Serves an employer and relies economically on that relationship.
• Autonomous Worker (Self-Employed): Does not depend on an employer to develop their work.

Functions of ANSES

ANSES (Administración Nacional de la Seguridad Social) manages national pensions and provides:

• Retirement benefits (pensions).
• Family allowances.
• Other social inputs.

ANSES administers files and organizes the necessary funds for citizens.

Note on Working Retirees

You can retire and continue working, receiving both the pension and the salary. However, contributions continue: the 11% deduction is redirected to the National Unemployment Fund. If the retiree dies, contributions may be charged to the surviving spouse or children (Survivor's Pension/Beneficiary control).

Social Work and Health Coverage (Obra Social)

A 3% deduction is taken from the salary for Obra Social (Social Work/Health Coverage). These can be public or private (prepaid).

Coverage and Contributions

• The 3% deduction covers the worker and their primary family group (children, spouse).
• Upon starting work, you may keep your previous coverage or use the one associated with your new employment.
• If you prefer a prepaid service, the 3% deduction can be redirected to that prepaid company.
• Some Obras Sociales make arrangements with prepaid companies, allowing the 3% contribution to be drawn from the prepaid account.
• You can change your Obra Social after one year of affiliation.
• Upon retirement, the 3% deduction is taken from the pension (jubilación).