The union federation wants to illegitimately take over workers' retirement savings, in the style of Cristina Kirchner.
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The PIT-CNT promotes, once again, the total nationalization of AFAPs. Eliminate the pillar of individual savings managed by private individuals, transfer accumulated funds to the BPS and turn everything into a pure “solidarity” distribution system. In practice, it means expropriating Uruguayans' pension savings for the State to manage and use as it pleases
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This is the same path that Argentina took in 2008 under Kirchnerism. And the material data are irrefutable: it was an economic and social disaster that destroyed value, eroded the purchasing power of retirees and left the pension system more dependent and vulnerable
than ever.
In October 2008, the Argentine government announced the nationalization of the AFJP (the equivalent of the Uruguayan AFAPs). At the stroke of a stroke, some $30 billion in funds accumulated by 9.5 million workers were transferred to the State. The official argument was to “protect” retirees from the global financial crisis. The reality, according to the numbers, was different: the State needed cash to finance its current expenditure, pay debt and sustain a distribution model that already had structural imbalances
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What happened to those funds once in the hands of ANSES (the equivalent of the BPS)? The Sustainability Guarantee Fund (FGS) was created. In theory, a “safeguard” for retirees. In practice, a discretionary checkbook for the Government. Between 2010 and 2015, the FGS grew at an annual rate of just 2.1% in dollars. A ridiculous return compared to what diversified private management with real incentives for profitability could have generated
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Even worse: a large part of these resources were placed in government bonds at rates below 8% per year, while real inflation exceeded 20%. In other words, the State lent workers' money to itself at negative rates in real terms. A disguised tax on pension savings
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The impact on capital markets was immediate and brutal. The announcement caused a 9.6% drop in the Merval index and 15.8% in the shares of banks such as the French one. The volume traded on the Buenos Aires Stock Exchange plummeted from 470 million dollars per month to 270 million dollars
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Country risk (EMBIG) skyrocketed more than in the rest of the region and remained high. Why? Because AFJP funds were the country's main institutional investors. As private demand for corporate stocks and bonds disappeared, financing to the productive sector shrunk. Less investment, less growth, less employment. Less capital to generate the wealth that, in the end, supports retirees.
At the level of retirees, the results were even clearer. The system went from a mixed scheme (distribution + individual capitalization) to a pure distribution. Contributions were no longer capitalized in personal accounts; they were used to pay for current retirees. This allowed, yes, to expand coverage through moratoriums and non-contributory retirees
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But at what cost: real assets were eroded by inflation and a lack of fiscal discipline. The State, having the funds without market counterweight, prioritized political spending over sustainability. The result was an increasingly deficit system, more dependent on Treasury transfers and more exposed to political discretion
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The data doesn't lie: what in 2008 was $30 billion in genuine workers' savings ended up financing works, subsidies and debt under political, not economic, criteria. There was no “rescue” of savings; there was expropriation and regressive redistribution. Those who saved for years saw their capital being diluted by inflation and poor government allocation. Those who didn't contribute received benefits paid for by the efforts of others. And future retirees inherited a system without accumulated reserves, where the pension depends on the State's ability to collect and not to waste
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This is not an abstract ideological discussion. It's cold arithmetic. An individual capitalization system forces private managers to seek real returns because affiliates can choose and returns are reflected in personal accounts. A state distribution system eliminates that incentive: the current politician uses the funds to buy votes today and postpones the adjustment until tomorrow. The material result is always the same: less savings, less investment, less growth and leaner retirees in real terms
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In Uruguay, the October 2024 plebiscite already made it clear that six out of ten Uruguayans reject this nationalization. Ignoring it would be an act of authoritarianism. But even more serious would be to repeat the Kirchner experiment: taking workers' savings, centralizing them in the BPS and letting the political-union caste manage them without being accountable to the market or to the real owners of that
money.
Argentine history shows this with numbers: nationalizing AFAPs does not save the pension system. It condemns it to fiscal ruin, to inflationary erosion and to the impoverishment of retirees. It's the perfect recipe to destroy savings, scare away investment and perpetuate the cycle of waste and misery that we
