This summary of social security and customary employee benefit practice has been prepared in close cooperation with the above Insurope Company.
|Social security||Customary Practice|
|Salaries covered||Compulsory Contribution basis has a minimun of 3 times the MOPRE (maximum 60), which is a variable calculated once a year according to National Budgets payment possibilities. At the moment the value of 1 MOPRE is AR$ 80.|
|Old age pension||
The retirement pension is a mix :
1. PSU (Prestacion Basica Universal : minimum of 30 years of participation (maximum 45). The benefit is equal to 2.5 times the AMPO + 1% of covered pay for each year of service beyond 30 years.
2. PC (Prestacion Compensatoria) recognises prior contributions with 1.5% of the final 10-year average salary per year of contribution up to 35 years of service until the effective date of the law. Maximum benefit of 1 AMPO per year of contribution.
3. The third component allows a choice between the PAP (Additional benefit for continued participation) state scheme and a private capitalisation scheme, an AFJP (pension fund) for those employees who are over 18 as of June 30, 1994, PAP benefit (Prestacion Adicional por Permanencia) is defined as 0.85% of final ten-year average salary per year of service after the effective date of the law in June 1994.
In an AFJP (Administradora de Fondos de Jubilacionea y Pensiones) the employee can make contributions to an individual capitalisation account of his choice up to 11% of monthly salary. Currently, 7% inforce until October 05, reduced to improve internal consumption.
Upon retirement the employee can purchase a lifetime monthly annuity or make schedule retirement payments while investment earnings are still credited on his account or use a combination of both the annuity and the scheduled payments.
Private plans are not the rule. They are often book
reserved. Some large companies have established
their own private pension plan. Typically it is a
defined contribution plan : employees contribute
from 2% up to a monthly salary of 4.800 pesos (60
MOPRE) and can choose to contribute 5.7 or 9% above
4.800 (60 MOPRE).
The employer can match the employee's contributions or contribute a flat amount for all classes of employees.
10 Years vesting is the standard in most plans but there is no rule.
|Lump sum on death||The employer must insure the employees for an amount of AR$ 6,480 each through a Group Life insurance contract. This amount can be adjusted.||
An additional Group Life insurance of 12 to 24
times monthly salary is common for clerical staff
Generally an accidental death and dismemberment rider giving 2 times the life amount is added.
The plans are generally contributory, mostly on a 50/50 basis.
|Survivors' pension||If the employee participating in a AFJP dies before retirement, a survivor's pension of 49-70% of the average 60 last months topped to 60 MOPREs is payable to the spouse and for the dependent children||Usually offered as a rider to the group life insurance contract.|
|Disability pension||If the employee participating in a AFJP becomes totally and permanently disabled before retirement, a pension is payable if disability is due to sickness or accident.|
|Index-linking||The MOPRE is calculated once a year based on National budget payment possibilities.|
- medical expenses
- sickness benefit
State hospitals offer all services for free to people with lower income and a range of basic services to others
The employer must maintain full income for 3 months for employees with less than 5 years of service (6 months if the employee has dependents). 6 Months if more than 5 years of service.
100% of earnings for female employees payable for 90 days. Medical care is free for the baby for a full year.
Pre-paid medical plans are offered to employees at the managerial level. They include hospitalisation, surgery, medical, maternity and dental care and typically contract with private hospitals.
Death : A lump sum is payable. The amount paid to
his beneficiaries is ARS $50.000. Another amount is
paid to his AFJP to be credited to his individual
capitalization account and is calculated according
to the formula :
Salary x (65/employee's age at death) x 53.
The sum of both must not exceed $230.000 or aprox. USD 77.000
Temporary disability: a full year of salary is guaranteed and after 3 years the disability is considered as permanent.
Permanent disability: a lump sum is payable
varying according to the degree of disability. In
case of disability both temporary and permanent the
benefit is increased by :
As of May 1996 it is mandatory to insure these benefits with an insurance company.
|Termination indemnity||On termination without just cause the
severance indemnity is equal to 1 month's salary
per year of service or three month seniority. The
salary considered will not be more than
3* the average of the sliding wage
scale. It is funded through book reserves up to 2%
is not tax advantageous but when paid, it becomes
It is tax free to the employee.
Pension : employer 16%, employee 11% on maximum
monthly salary of 60 MOPRES or AR$4.800.
Medical : employer 6%, employee 3% on the full salary.
Employer's and employee's social security contributions are tax deductible.
Employer's contributions to group life and disability are tax deductible. Employee's contributions to each such plans are deductible only on the death portion of the premium.
Employer's and employee's contributions to a retirement plan are deductible up to a certain amount which varies in the course of the year. (A$ 1,261 for employee, A$ 630 for employer).
Private pensions are taxable as earned income to the recipient. Lump sums on death and disability are not taxable.