After the strong adjustment in retirements, they warn that assets will not recover what was lost in 2025

After passing the chainsaw in 2024, the Government must define what will be the main mechanism to sustain the surplus in public accounts. Xavier Milei has already applied a fiscal adjustment of almost 5 points and salaries took the worst part: Pension spending supported 25% of the reduction in spending and by the end of the year it is expected that the minimum amount with the bonus will close with a year-on-year drop of 6.7% in real terms, according to the IARAF.

If that projection is fulfilled, Retirees will spend the holidays with a lower real income than this year. Today, the minimum asset is $259,598.76 and the bonus is $70,000 ($329,598.76). Going forward, specialists see greater difficulties in continuing to reduce spending in 2025 in this way due to the fall in inflation – in November it was 2.4% – and the mobility that has been updated by the Consumer Price Index since July. (IPC).

“The margin to adjust via spending is less, and with the fall in inflation and the current adjustment formula in retirements, it is likely that spending will accelerate next year in this regard. Either the government hopes that the recovery of activity will result in a significant increase through collection, or alternatives will have to be sought to comply with the fiscal commitment,” said Francisco Rittorto, economist at ACM.

In the first months of the year, The devaluation and the inflationary flash along with the freezing of spending caused a “liquefaction” of assets. The Government also froze the bonus for the minimum salaries at $70,000. But the impact was heterogeneous: the minimum retirement with a bonus fell 3% real year-on-year in November, while the average pension rose 2.5%, according to Marcelo Capello, IERAL economist.

To sustain the spending adjustment, in September the Government vetoed the laws passed by Congress aimed at restoring retirement benefits and increasing budgetary resources for public universities. Even so, The “blender” effect began to lose its effect in recent months and pension spending with a bonus went from falling 32% real year-on-year in January to 1.1% real in November, according to the IARAF.

This item, which represents 40% of primary spending, could register an increase in real terms in December. “It is important to project what can happen with retirement spending during the last two months of the yearthe conclusion being that the real interannual change is going to change direction. That is, it will start to rise, instead of falling,” said the head of the IARAF, Nadín Argañaraz, in a recent report.

While the Government is on track to extend the 2023 Budget for the second consecutive year, the 2025 Budget projections serve as a guide to what to expect this year. The expectation is that spending will be maintained in real terms (except for rate subsidies, where there will be an additional adjustment) and that revenue will grow 8.1% in real terms, compensating for the loss of the PAIS tax and the relief on Personal Assets.

If this scenario occurs, retirees would not recover what was lost in 2024. “The formula approved by DNU adjusts for lagged inflation, which is quite stable, so there is no acceleration or deceleration that produces a change in the real variation, The most plausible hypothesis is that the real mass of pensions is maintained and the real value neither recovers nor loses ground“said Nicolás Gadano, economist at Empiria.

For Argañaraz, if inflation continued to decline in 2025, reaching 2% monthly at the end of the year and totaling end-to-end inflation of 48%, the real annual income would have an improvement of 15% compared to 2024. But If the government keeps the value of the bonus fixed at $70,000 throughout 2025, the real annual income of people who earn the minimum would be practically the same as in 2024..

“Without a doubt, The deficient investment in infrastructure works cannot extend ad-eternum, just as pension spending seems to have hit a floor and there would be no social margin to continue adjusting, although the Government has recently demonstrated with the cut to the provision of medicines that it still has “ideas to maintain a decreasing path in expenditures,” said the consulting firm Vectorial.