Uruguay discreetly raises the retirement age from 60 to 65 years old

By Ken Parks

Uruguayan President Luis Lacalle Pou signed his landmark pension law on Tuesday, ending a major legislative reform without the violent protests seen in other countries after governments pushed through similar changes.

The Uruguayan Senate approved a watered-down version of the law that incorporated last-minute changes demanded by two coalition parties in the lower house.

The bill will raise the retirement age for many Uruguayans from 60 to 65 and encourage personal savings, among other measures.

“It is a reform with social sensitivity,” Lacalle Pou said in a video broadcast on state media shortly after Senate approval.

Asking people to work longer for the same, or less, retirement money is proving politically controversial worldwide.

Although Lacalle Pou’s unpopular initiative sparked union strikes, the discontent did not erupt into the violence experienced in France when President Emmanuel Macron enacted his pension reform last month.

Most recently, on May 1, protesters returned to the streets of Paris, even after France’s supreme court approved the change.

There is also the case of Argentina, a reform bill proposed in 2017 by former President Mauricio Macri that sparked violent protests outside the country’s legislature.

Ireland and Canada have also faced public rejection of pension changes.

Lacalle Pou’s reform reflects Uruguay’s trademark for consensus politics, which often moves at a glacial pace but rarely leads to violence.

Uruguay’s public debate on pension reform dragged on for two years and involved input from all stakeholders that helped give the reform legitimacy, said Gabriel Oddone, chief economist at Montevideo-based consulting and accounting firm CPA Ferrere.

“You can’t say that the government didn’t seek agreements or consensus,” Oddone said in a telephone interview.

“The reform is not what many of us would have liked, but it is better than what we have today.”

Both left and right agreed that something must be done to stabilize pension spending sustainably.

But they had opposing views on how to fix one of the region’s deepest retirement systems that have virtually eradicated old-age poverty in the country of 3.5 million people.

The leftist opposition Broad Front demanded a more ambitious overhaul of the social security system financed by tax increases.

Broad Front president and former union boss Fernando Pereira said his party would do just that if it wins the general election next year.

“We think reforms like this require broad consensus and financial sustainability, as the government says, but also social sustainability,” he said in televised comments.

With information from Bloomberg