Buenos Aires Times

argentina JUDICIARY

Supreme Court rules out pension cut as 'unconstitutional'

The decision effectively forces the Macri administration back to the drawing board and into the hands of an ever hostile national Congress.

Thursday 20 December, 2018
Argentina's Supreme Court Justices, from left to right: Ricardo Lorenzetti, Elena Highton de Nolasco, Carlos Rosenkrantz, Carlos Maqueda and Horacio Rosatti.
Argentina's Supreme Court Justices, from left to right: Ricardo Lorenzetti, Elena Highton de Nolasco, Carlos Rosenkrantz, Carlos Maqueda and Horacio Rosatti. Foto:Noticias Argentinas

Argentina’s Supreme Court this week rejected a move to change the index used to calculate pensions pushed by the government, a ruling that will boost pensioners’ pockets and send the government back to the legislative drawing board.

On Tuesday, the justices of the nation’s highest court ruled against legislation that sought to modify the index used measure such payments, declaring a 2017 reform to the system was “unconstitutional.” 

In a blow to the President Mauricio Macri administration, the court voted four-to-one against the new index. Chief Justice Carlos Rosenkratz delivered the sole dissident vote. 

The ruling was based on one case in particular, but it sets a precedent for another 150,000 retirees who have also filed similar legal claims.

In its ruling, the justices said the government should use a more beneficial index to pay pensioners and asked Congress to debate a new law.

The decision effectively forces Macri back to the drawing board and into the hands of an ever hostile national Congress, whose 128-116 approval of the bill last year led to violent clashes between protesters and police. Union confederations also opposed the law, leading a 24-hour strike in protest.

The government's proposed index would have saved the national coffers an estimated 100,000 million pesos (US$2.5 billion), as it attempts to comply with austerity requirements tied to a US$56-billion stand-by loan package with the International Monetary Fund (IMF).

The Court's decision applied to just one case, that of Lucio Orlando Blanco, but establishes a precedent for an additional 150,000 pensioners pursuing similar injunctions. 

Hundreds of pensioners waited patiently outside the Tribunales building in downtown Buenos Aires on Tuesday to hear the ruling. Some described the law as a "looting of pensions".

The legislation sought to change the formula that pension benefits were calculated, based on inflation instead of wage growth and tax contributions. 

It was a key part of a series of economic changes pushed by Macri to reduce the country’s high deficit and attract investments.

 -TIMES

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