Profile on Argentina : by Insurope Network Partner HSBC Seguros de Vida Argentina S.A.

our Network Partner in Argentina

HSBC Seguros de Vida Argentina S.A.

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
Persons covered
Normal retirement - Males - Females	65 65
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 and manager/directors. 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 benefits - 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.
Workmen's compensation	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 : 3 MOPRES/monthly if long term care at home is needed. The Insurer (ART) must pay for all medical, pharmaceuticals, prosthesis and rehabilitation care. 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 tax deductible. It is tax free to the employee.
Contributions	Pension : employer 16%, employee 11% on maximum monthly salary of 60 MOPRES or AR$4.800. Medical : employer 6%, employee 3% on the full salary.
Taxation - Contributions - benefits	Employer's and employee's social security contributions are tax deductible.	Employer's contributions to group life and disability are tax deductible. Employee's contributions to each such plans are deductible only on the death portion of the premium. Employer's and employee's contributions to a retirement plan are deductible up to a certain amount which varies in the course of the year. (A$ 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.