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The pension reform is already in force in Uruguay: what changes with this crucial plan for Luis Lacalle Pou

Increases the retirement age from 60 to 65 years. It was approved after long debates and changes. Rejection of unions.

The retirement reform that the center-right president Luis Lacalle Pou promoted as a flagship goal for his mandate, it already applies in Uruguay, where, among other changes, the retirement age range from 60 to 65 years and all retirees could choose to maintain a work activity.

Approved on April 27 in Parliament with the votes of the five members of the coalition formed for the government of Lacalle Pou, the so-called “social security reform” was among his promises to be fulfilled, made shortly before the ballot of 2019 in the document “Commitment for the country”.

Raised there as an advance towards “a modern, financially sustainable pension system (…) that takes special care of liabilities with higher levels of vulnerability”, the reform began to take effect in August as the result of a “virtuous” process.

This, at least, was expressed in dialogue with EFE by the president of the Banco de Previsión Social (BPS), Alfredo Cabrera, who stressed that the reform outlined in Law 20,130 is “a very Uruguayan reform.”

A protest in Montevideo by the PIT-CNT trade union, which rejected the pension reform of Luis Lacalle Pou. Photo: EFE

“We have defined it this way because it starts from a great previous discussion that had a discussion process first at the level of experts, then at the level of the Executive Branch; it was presented to the opposition, it had a great debate before having parliamentary status and then it had ( in Parliament) a very broad discussion until it is approved,” he explained.

According to the former deputy for the ruling National Party, who since 2021 has chaired the autonomous coordinating entity of state social security services, both this debate prelude and the “long transition period” scheduled for full implementation, which will be gradual, are consistent with the tradition of a Uruguay whose pension system is extensive.

“Uruguay is a country with a long tradition in social security and a very mature system with very broad coverage. Between the BPS and the other subsystems, coverage for people over 65 years of age is close to 95%, it is very high and it is also a country with an informality rate of 20%, very low for Latin America,” he explained.

Although he pointed out that “it was not voted for by the entire political system”, since it was rejected by the left-wing opposition coalition Frente Amplio, For Cabrera, the reform had a “virtuous” process in which “the government set itself an objective and followed through with the steps until it was achieved.”

The President of Uruguay, Luis Lacalle Pou, in Congress.  Photo: EFE

The President of Uruguay, Luis Lacalle Pou, in Congress. Photo: EFE


In a press conference, the Uruguayan Minister of Labor and Social Security, Pablo Mieres, underscored the importance of the numerous changes foreseen in the reform coming into force in August.

One of the key aspects that both Cabrera and Mieres highlighted is that of the so-called “compatibility between work and retirementbecause although those who retired from the civil fund -for example public officials- could return to work in industry and commerce, the retirees of this last category -the majority of the country- could not do so.

“It was a situation of inequality that we had to correct. (This) means the acquisition of new rights for a very high number of people who are already retired and workers who, as they retire, will be able to access this right,” emphasized Mieres.

According to Cabrera, the “flexible partial retirement” now applies to dependent workers, which -with the requirements of 65 years and at least 30 years of work- allows them to access retirement and continue working with reduced hours, and for non-dependents the option to continue their activity without contributing or to retire and work if they employ staff.

The lawyer says that this can be beneficial for the system because retirees who already work “informally” will be able to do so formally.

A march of the unions against the government of Luis Lacalle Pou, at the end of 2021. Photo: AFP

A march of the unions against the government of Luis Lacalle Pou, at the end of 2021. Photo: AFP

union rejection

In addition to having the rejection of the FA, the Lacalle Pou reform provoked numerous protests from the country’s trade union center, the PIT-CNT, which is evaluating the feasibility of a plebiscite to nullify it.

Consulted by EFE, the president of the National Organization of Associations of Retirees and Pensioners of Uruguay (ONAJPU), Estela Ovelar, believes that the possibility of retiring and working is not bad if it is “by decision of the person and not by necessity (economic )”.

“If we look at it as a whole, the little good that it has is overshadowed by what is not so good. A reform that only increases the working age and in some cases would lower the replacement rate seems insufficient, which will win the person”, he rounds.

Source: EFE


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