Uruguay Senate approves government-backed pension reform

The pension reform proposed by President Luis Lacalle Pou of Uruguay took its first big step yesterday after the country’s Senate passed the bill with 18 votes from a total of 30. 

The bill unifies most of the country’s pension schemes under one roof, while also raising the retirement age from 60 to 65 years old. Unions and the center-left Frente Amplio opposition coalition have sternly criticized it.

Approval in the House is still pending, with a debate in the lower chamber penciled in for February.

“Violating campaign promises, the government votes for a pension reform while giving its back to the public, affecting Uruguayans’ present and future,” a Frente Amplio tweet said shortly before the vote. Further protests against the bill are expected, following demonstrations early in November. 

Mr. Lacalle Pou admitted to breaking campaign promises earlier this year, saying he did not know the full extent of the pension system’s fiscal impact. 

The president had to negotiate until the last minute, as opposition within his ruling coalition forced him to exclude some pension schemes from the plan. Conservative party Cabildo Abierto argued that schemes that never asked for state support throughout their history did not need reforming.

The rise in retirement age will be gradual. Uruguayans born in 1973 will be able to retire by 2036 (at 63 years old) while those from 1974 will have to wait until 2038, after reaching 64, and the class of 1975 will join them on their 65th birthday in 2040.

Some exceptions include those with 30 years or more of pension contributions by the time the bill is turned into law, as well as those with 40-plus years in service or who take part in physically exerting jobs such as construction and farming. 

This would be the largest political triumph for Mr. Lacalle Pou since his narrow win in a Frente Amplio-backed referendum against his Law of Urgent Consideration earlier this year, which introduced reforms on education, policing, public protests, and more.

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