Adjustment of retirement pension payments exceeding $ 1,000

On August 8, 2006 the Argentine Supreme Court of Justice (the “Supreme Court”) resolved, by a judgment passed in re: “Badaro, Adolfo Valentín vs. ANSES for several adjustments” that the adjustment of retirement pension payments is constitutional and ordered Congress to approve the appropriate procedure for the regular adjustment of retirement pension payments.

1.    Background

In the above-mentioned case Mr. Badaro petitioned for a ruling that his retirement pension payment be adjusted and that the decrees providing increases discriminated against those who received payment exceeding the minimum amount and in particular those receiving more than $ 1,000 per month should be declared unconstitutional.

As of August 2003 minimum retirement pension amounts were increased five fold and in September 2004 a 10% increase was granted but such increase was not applicable to retirement pension payments exceeding $ 1,000. It was only in 2006 that an 11% raise was granted for all retired people and pensioners regardless of their category.

The criteria for the application of the increases granted in the last three years is incompatible with the provisions of the Social Security Solidarity Law that provided that retirement pension payments should be adjusted by Congress according to the development of salary levels.

2.    The decision

The judges of the Supreme Court unanimously decided to approve the possibility of readjusting retirement pension payments exceeding $ 1,000 taking into account the changes in the economic and social conditions affecting the quality of life of pensioners and the fact that retirement pension payments had not benefited from the consolidated economic variables recovery process as from 2003. 

One of the arguments given by the Supreme Court pointed out that “section 14 bis of the Argentine Constitution guarantees the adjustment of retirement pension payments indicating that the criteria applicable to such end should be determined by Congress” and that “the purpose of this constitutional guaranty is to adjust payments over time so as to keep them in line with the value of salaries”.

To conclude, the Supreme Court delegated the resolution as regards the legal aspects of the update and ruled that Congress is the competent body to establish the criteria it may deem appropriate with adequate and reasonable regulations.