Argentina To Nationalize $24 Billion Worth Pension Funds

Rio De Janerio, Argentina (AHN) - Argentina's Senate authorized President Cristina Fernandez de Kirchner's proposal to nationalize around $24 billion private pension funds, in a move to insulate retirement savings from the effects of stock market devaluation.

But the critics and opposition claim that the government's plan to takeover will only avert the financial crisis hitting the pension funds on short-term basis and the step will limit retirees' long term income.

The country's Senate voted in favor of the bill after a 12-hour long session, following its approval in the lower house on November 7. It was on October 21 when President Kirchner first announced the takeover plan.

"The privatization system has failed, it's spent, it's in crisis. It has been a burden for Argentines. Sooner or later, the state had to deal with the crisis," peronist Senator Miguel Angel Pichetto was quoted saying by AFP news agency, during the 12-hour debate before the vote.

The decision would lead the pension funds managed by 10 private funds to be transfered to Anses, a state-run social security agency, for further management and administration. Eight of the 10 private funds are managed by private banks

The country's private pension funds cover 9.5 million workers, out of which around 3.6 million contribute meaningfully. The government said that the funds have lost market value of as much as 17.5 percent or $8.1 million in between October 2007 and October 2008.