The controversial proposal has sparked demonstrations throughout the country, but after a 14-hour debate, Argentina’s Lower House overwhelmingly approved President Cristina Kirchner’s plan to nationalize private pension funds. The vote in the lower house, which is dominated by the governing Peronist party, was 162 to 75.
Analysts said the ruling Peronist party should have the votes to nationalize the funds when the Senate takes up the bill later this month.
President Kirchner has said that seizing the private funds – nearly $30 billion in assets, as well as future pension contributions amounting to $4 billion to $5 billion annually – will protect Argentina’s savers amid the global market turbulence (see Argentina President Moves to Nationalize Pensions ). Critics have said the takeover is intended to get the government out of a cash squeeze in the coming year, during which it will face heavy debt payments as well as political pressure to increase spending as midterm elections approach.
Argentina established the private pension funds in 1994, under conservative president Carlos Saúl Menem. Workers had the choice of going into the new system or staying in a revamped state system. The association representing the 10 private funds has also threatened legal challenges to the takeover.