Senate approves in general the Social Security System Reform

URUGUAY - In Brief 28 Dec 2022 by Esteban Fernández Medrano

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In the early hours of today, the Senate approved in general terms the “common pension system bill”, i.e. the social security reform that rises the minimum retirement age from 60 to 65 and represents one of president Luis Lavalle Pou’s (LLP) politically costly, but strategic reform projects. Even though the discussion process ahead of the vote, as often happens in Uruguay, has been extended and broad-based, involving not only the members of the coalition party but also an invitation to the opposition Frente Amplio (FA), eventually the opposition declined direct participation in the pre-discussions and voted against the bill, knowing that the government coalition had the required votes to approve the bill. This way, the FA avoided paying the political cost of supporting a needed increase in the retirement age, but in a hypothetical government in the future would benefit from a healthier fiscal account. In fact, the bill was approved by 18 votes in favor over the total of 30, implying at least one favorable vote from a FA senator. The senate continues voting today (probably over the following days) on the individual articles of the bill to eventually pass it to the Lower House, which is expected to debate it after the local summer recess. Given the extended pre-discussions and the consequential unity of the multicolor coalition on this issue, the government is expected to get the bill approved in both houses. One of the factors to follow is the social reactions to the bill, in particular of the syndicates which are naturally against it. But despite the FA and the syndicates' opposition, we expect those protests to have more of a symbolic nature rather than being truly dis...