Teacher retirement: Action filed against fiscal reform

Teacher unions in Paraguay have filed a legal challenge against a recently enacted pension reform law, arguing it unfairly burdens educators. The unions presented an action of unconstitutionality before the Judiciary, targeting Law N° 7.633, which they claim harms teachers economically by increasing monthly contributions and establishing minimum retirement ages.

The law, approved by the National Congress on March 17 and promulgated by President Santiago Peña on March 18, faced significant opposition from educators who organized widespread protests. The original proposal from the Executive branch suggested retirement ages of 57 for extraordinary cases and 62 for ordinary retirement. However, due to pressure from teacher groups, the minimum age was lowered to 53, requiring at least 25 years of contributions.

A key point of contention is the increase in contribution percentages. Previously, teachers contributed 16% of their salaries to the pension fund; this has now risen to 19%. Teachers report salary deductions exceeding 500,000 Paraguayan guaranies since April due to this change. The unions argue that such a reform, impacting social rights like retirement, should be progressive, not regressive, especially in a social state of law like Paraguay.

Union leaders also criticized Article 11 of the reform, labeling it "confiscatory." This article restricts the withdrawal of contributions for those who resign without retiring, unless their accounts are in deficit. "This means you can contribute for 23, 24 years, then leave for another activity, and you cannot withdraw your contributions because your account is in deficit," explained Gabriel Espínola, general secretary of the Organization of Workers of Education (Otep - Auténtica). The unions are now awaiting a decision from the Supreme Court of Justice on whether to admit or reject their challenge.

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in a social state of Law, which Paraguay is based on, a normative based on social rights, such as retirement, must be progressive and not regressive, as this law is with these changes.