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Argentina 'to take over pensions' Argentina to take over pensions
(about 5 hours later)
The Argentine government is expected to announce plans to nationalise the country's 10 private pension funds. Argentina's President Cristina Fernandez has signed a bill that will nationalise the country's 10 private pension funds.
The move will put the government in control of almost $30bn (£18bn) of investments, and is aimed at protecting them from the global market turmoil. The move will put the government in control of almost $30bn (£18bn) of investments and is aimed at protecting them from the global market turmoil.
But expectations of the announcement has sent Argentine shares 12% lower, as investors fear what impact the decision will have on the stock market. Shares slumped amid fears of the move's impact and critics accused the government of trying to grab the funds.
Critics accuse the government of simply wishing to get its hands on the funds. The bill requires Congress approval but the ruling party has a majority there.
They say the government needs the extra money ahead of a tough budget year. 'Solid mechanism'
As the 10 private pension funds are the country's largest institutional investors, the expected announcement has also hit the value of the peso and Argentine bonds. Ms Fernandez said that Argentina needed to protect those with pensions amid falling stock prices around the world.
Left-leaning President Cristina Fernandez is expected to announce legislation to introduce the changes. However, expectations of the announcement sent Argentine shares 11% lower and critics said the government simply wanted its hands on the money ahead of a tough budget year.
This will then go before parliament, which is also controlled by her Front for Victory political grouping. As the 10 private pension funds are the country's largest institutional investors, the announcement also hit the value of the peso and Argentine bonds.
Amado Boudou, head of the National Social Security Administration, which will take over the funds, said the "failed experiment" of private pensions was finished.
But the pension administrators defended the system, saying it had a "solid mechanism" that had seen an "almost constant growth trend in the 14 years of its existence".
Union leaders have welcomed the nationalisation move. The commissions on the pensions and the lack of a guaranteed minimum pension has made the private system unpopular with many Argentines.
Congress, controlled by Ms Fernandez's Front for Victory political grouping, will debate the bill next week.