Special Regime for Labor Severance Funds

On June 18, 2025, through General Resolution 1071, the Argentine Securities Commission (CNV) approved a new regulatory chapter governing the operation of open-end mutual funds (FCI) and financial trusts (FF) for labor severance, in line with Decree 847/2024. This Resolution was issued following a public consultation under General Resolution 1066.

 

This regulation falls under the scope of Decree 847/2024, issued under Law 27742 Foundations and Starting Points for the Freedom of the Argentine People, which regulates the promotion of registered employment and labor modernization. The Decree calls for the implementation of a labor severance system as an alternative regime, agreed upon in union agreements, to replace statutory severance and other related compensations under the Argentine Labor Contract Law.

 

Within this framework, the Decree provides that the system may be structured through FCI and FF for labor severance, allowing contributions at an individual, company, or industry level. These funds would be non-attachable and solely allocated to the benefits agreed in union agreements. Some

 

key features of the proposed FCI and FF for labor severance will be discussed below.

 

First, there are flexible contribution structures, meaning units or trust securities may be established at an individual, company, or industry level. Parties may freely agree on the contribution percentage or fixed amount, as well as on the payment frequency and other characteristics. Contributions can be allocated to company-level or sector-wide funds and may be made by employers, employees, or both, as determined in the relevant union agreement.

 

These instruments are protected from attachment by creditors of either party, regardless of the nature of the debt. Assets and income of the labor severance collective investment products (PICs) must be exclusively used to fund agreed-upon benefits.

 

Only direct or indirect employer and/or employee contributions are allowed. In the case of employer contributions, units or trust securities will be assigned under a suspensive condition in favor of the employee, company, or sector, as outlined on the applicable union agreement. The depositary company or financial trustee, as applicable, must keep subaccount records reflecting these assignments. Union agreements must also state that the signatory parties cannot benefit from unclaimed funds and must define their allocation.

 

Second, the Decree explicitly designated the CNV as the regulatory and supervisory authority for these instruments, ensuring proper investment policies and compliance with the regime.

 

Consequently, under Resolution 1071, the CNV approved a special regulatory regime for PICs is being promoted within the CNV’s legal scope. So-called labor severance PICs must include the term Cese Laboral (labor severance) in their names.

 

Furthermore, they must specify—in the trust agreement or the funds regulation—a reliable notification mechanism which may include electronic means, through which the employer informs the financial trustee or the bodies of the FCI (as the case may be) that the cause for the payment of the amounts resulting from the severance system or the change of ownership of the quotas in favor of the employee has taken place.

 

General Resolution 1071 provides that FCI for labor severance will not use the standard management regulations and must have a specific regulation tailored to this special regime. However, general rules regarding operations, asset valuation, and investment diversification will still apply.

 

FCI may not invest in instruments issued by their contributing employers nor concentrate more than 30% of their assets in a single industry. The depositary company must maintain detailed records of all units, including those conditionally assigned to employees. Once the units are transferred to the worker, they may dispose of them freely, though no further subscriptions will be allowed.

 

Meanwhile, FF for labor severance will not be required to prepare CNV-approved prospectuses but must be published on the Financial Information Highway (AIF). Incorporating new settlors during the trust’s term will be allowed if provided for in the agreement and in the case of companies that choose to implement the labor severance system.

 

Both FCIs and FFs must implement conservative, diversified investment policies; maintain regular information channels for workers, with reports issued at least once a month; and ensure proper mechanisms for fund or trust liquidation and cancellation. The participation of investment advisors or committees is allowed if they have no ties to unions and if their fees are reasonable.