Argentine President Cristina Kirchner moved Tuesday to nationalize 30 billion dollars in private pension funds, saying it was necessary to protect retirees in the global financial crisis.
"We are taking this decision in the international context in which the G-8 countries and others are seeking ways to protect banks," Kirchner said as she presented the nationalization plan, which still must be approved by the Argentine congress.
"We are protecting our retirees and workers," she said.
The government is taking the step after the 10 companies in the private pension sector suffered severe losses in the crumbling stock and bond markets, according to an official who insisted on anonymity.
Local media cited official sources as saying the funds had incurred losses of around 20 percent as global financial markets succumbed to panic.
The Argentine stock market plummeted another 11 percent Tuesday in reaction to the announcement, as the private pension funds strongly criticized the measure as a "short-term" move and insisted that their assets remained health.
"The market was shattered by the drastic change to the rules of the game concerning the pensions. It amounts to a confiscation of private capital," said stockbroker Luis Corsiglia.
The ten firms together administer around 30 billion dollars in retirement savings of 53 percent of Argentine workers, and take in about 4.6 billion dollars each year in new contributions.
Eight of the ten are controlled by private banks. One is a cooperative and another is controlled by state-owned Banco Nacion, the country's most important bank.
The political opposition accused the government of confiscating the private pension funds to help service the national debt of some 150 billion dollars.