This week two things happened that reminded me of one of the most perverse things that goes on in this country and nothing ever gets done about it: Government pensions. The two things that happened were the resignation of Minister Hector Navarro from the Ministry of Higher Education and the issuing of new pension rules at the Venezuelan Central Bank.
Navarro, who has been a Minister from day one of the Chavez administration, quit his position in order to go back to his duties at Universidad Central de Venezuela and retire in one and a half years. Navarro is in his late forties or early fifties and will take advantage of the generous pensions in Venezuelan Universities which allow you to retire after 25 (twenty five) years at full salary and benefits, without ever contributing to a pension fund. Moreover, the system is such that when the salary of Professors is increased, retired Professors get the increase too. Additionally, if you die, the same benefits are transferred over to your widow until her death.
Similarly, the Central Bank issued new ®tougher® rules on pensions from that institution. by which men wanting to retire will now need 20 years of service if they are 60 years old, 20 if you are 55 years old or 35 years of service. For women, they can retire after 20 years of service if they are 55 years old. All of these pensions are automatically adjusted if the person holding your last position receives a salary increase. Thus, all former Presidents of the Central Bank who have retired, and there are a few around receive the same pension, all without ever having contributed to a pension fund.
This extremely absurd system has been in place for a long time. No country, however rich can sustain a pension system like this one. There have been two attempts to change it; one was changed at the last minute. The second one took place during Calderaís last year, led by Tal Cual Editorīs Teodoro Petkoff and was supposed to take effect on the year 2000. That bill established both Government and private pension funds which would be by contribution only. Additionally, it established uniform criteria for retirement, either 65 years of age or 35 years of service. In addition to providing a healthy pension system, it wouldprovide a pool of savings that could invest in Government bonds, solving two problems at once. The perversity had been supposedly eliminated from the system; much like Lula did in Brazil in his first year in power.
When Chavez got to power he named a commission to study the new law and gave it six months to make changes. Then he extended it six months. He gave them an additional six months and, unfortunately, that was the last we heard of the issue.
The commission made a big deal out of the fact that the laws allowed the banks to get into the pension fund business. The way I understand it however, was that most of the members of the Commission were either revolutionary academics that felt their future pensions were threatened by the Bill, or MVR or PPT politicians who saw their extremely generous Assembly pensions in danger.
The result was typical Venezuelan: do nothing. Unfortunately, only a few will continue to benefit from this indecision, in a manner which I find both obscene and perverse. But this is not a political issue, for either side.