El Salvador approves reforms to the national pension system

 El Salvador’s Congress approved reforms to the national pension system on Tuesday, including the increase of pensions and the creation of an entity to supervise the retirement income system. 

With 67 votes in favor, the congress approved reforms to the pension system proposed by Salvadoran President Nayib Bukele, including a 30% rise in pensions and a cap of $3,000 a month, according to La Prensa Grafica. 

The minimum pension will rise from $304 to $400 a month, according to a statement by the government that claims that around 100,000 people who should be retired are still working due to the low pensions they would receive if they retired. 

Additionally, congress also approved the creation of a state entity that will oversee the pension system and private funds, the Salvadoran Pension Institute. 

The reforms will go into effect in January 2023 for all workers affiliated with the pension system, the statement added. 

However, many critics believe the reforms are not enough to address the problems surrounding the Central American country’s national pension system. 

The reforms "do not provide a comprehensive response to the structural problems of the pension system in terms of coverage, sufficiency, equity, and sustainability," said Ricardo Castaneda, an economist at the Institute for Fiscal Studies, a private think tank.