Page last updated at 21:35 GMT, Tuesday, 21 October 2008 22:35 UK

Argentina to take over pensions

President Cristina Fernandez
President Fernandez's bill will now go to Congress

Argentina's President Cristina Fernandez has signed a bill that will nationalise the country's 10 private pension funds.

The move will put the government in control of almost $30bn (18bn) of investments and is aimed at protecting them from the global market turmoil.

Shares slumped amid fears of the move's impact and critics accused the government of trying to grab the funds.

The bill needs the backing of Congress, where the ruling party has a majority.

'Solid mechanism'

Ms Fernandez said that Argentina needed to protect those with pensions amid falling stock prices around the world.

However, expectations of the announcement sent Argentine shares 11% lower and critics said the government simply wanted its hands on the money ahead of a tough budget year.

As the 10 private pension funds are the country's largest institutional investors, the announcement also hit the value of the peso and Argentine bonds.

Amado Boudou, head of the National Social Security Administration, which will take over the funds, said the "failed experiment" of private pensions was finished.

But the pension administrators defended the system, saying it had a "solid mechanism" that had seen an "almost constant growth trend in the 14 years of its existence".

Union leaders have welcomed the nationalisation move. The commissions on the pensions and the lack of a guaranteed minimum pension has made the private system unpopular with many Argentines.

Congress, controlled by Ms Fernandez's Front for Victory political grouping, will debate the bill next week.

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