With an early welfare system, Argentina’s demography is more similar to the South European countries than to the majority of Latin American ones. The country reformed its old fashioned Pay-As-You-Go system in the 1990s, introducing a Fully Funded scheme, which was intended to solve the financial stress of the social security, as well as to yield positive externalities on the financial system, the savings rate and economic growth. After 15 years of functioning, the system was closed, their affiliates sent to Pay-As-You-Go again, and the accumulated savings went to the public social security administration, which is in charge of future benefits. The official explanation for such an ending was that the international financial crisis was a peril for future pensioners, and also that the (private) pension funds administrators were not the proper managers of the funds. In the Congress, the political majorities for this reform were remarkable strong in both chambers. Protests of the saving accounts owners were not loud, in a country with a tradition of mass demonstrations. How it happened? Why? Did pension fund administrators work properly for their affiliates, given the constraints they faced? Can we learn some lessons, relevant to other countries with similar characteristics (i.e., Latin American, Eastern European or Central Asian), besides the uniqueness of the local circumstances? We think so, and we worked on developing the lessons of this experience. We debate on the process and we asked if it could occur in some other place. We conclude that it can, since weak political consensus on the reform is built. It also could happen when the objectives and the instruments are not properly differentiated. Are we in search of fixing the social security or of promoting national savings? Also, the marketing and the counter marketing of the reform could polarize the debate, and to difficult the per se complex consensus. Finally, the counter reform has unexpected pay- offs, since making implicit the public debt due to the ...
