• The confiscation of pension funds in Argentina in 2008 is a case of extreme populism, unique in the world to date, because of the way it was implemented.
• The real reasons for the confiscation were political, together with the government’s need for greater financial resources. It was enforced despite the fact that workers preferred the individually funded system, as evidenced in their enrollment decisions.
• The structural reform was carried out without actuarial studies, with little public debate and without the participation of technicians and interest groups. In fact, its discussion in Congress was completed in less than two months.
• The administration of the new system suffers from a lack of transparency and autonomy from the incumbent government. Furthermore, there is no specialized technical and oversight agency, and the existing oversight agencies are strongly biased politically.
• Post-nationalization experience shows that the system’s pensions and replacement rates have not improved and that there is high uncertainty regarding the ability to pay the future pensions of workers. This is due to the lack of financial sustainability of the system, the depletion of the Sustainability Guarantee Fund (FGS), and the fact that the situation will worsen over time due to the demographic trends affecting the PAYGO systems. All these problems have led the Argentine pension system to perform very poorly in international ratings. In fact, in the Mercer CFA Institute 2020 Global Pension Index, Argentina ranked second to last out of 39 countries, receiving its worst ratings for sustainability and integrity.
• Hence, the Argentine case illustrates a mistaken procedure that should not be followed by other countries in Latin America or the world.

To access the full document, please click here.