Increased Pressure on Pensions: 34 Self-Employed Workers Needed to Fund an Average Pension

The growth of the self-employed tax regime as a mode of labor insertion is changing the way the Argentine Integrated Pension System (SIPA) is financed. While the regime has allowed millions of independent workers to enter a certain formality, the low level of their contributions, combined with high informality and an aging population, deepens the tensions over the financing of pensions.

Currently, nearly 34 self-employed workers are needed to finance an average pension and 3.5 registered salaried workers, according to a report from the Institute of Studies on Argentine and Latin American Reality (IERAL). In the case of a minimum pension with a bonus, the difference is also marked, as 2.4 salaried workers are required compared to almost 23 self-employed workers.

Since November 2023, 150,158 (+7.4%) workers have joined the self-employed tax regime, according to seasonally adjusted SIPA data up to April 2026. During the same period, self-employed workers increased by 1,494 registered (+0.4%) and registered employment - which includes private, public, and domestic workers - suffered a loss of 329,667 jobs (-3.2%), with a greater decline in the private sector (-235,419 or -3.7%).

Thus, "the sustainability of the system no longer depends solely on demographic evolution, but also on the amount of contributions that enter," the report noted.

Currently, SIPA has 10.3 million contributors to finance 7.5 million pension benefits. Of the total contributors, 74% are dependent workers, while the remaining 26% are independent. Within this group, 2.2 million belong to the self-employed tax regime.

The participation of the self-employed tax regime within the universe of contributors has more than doubled in almost three decades. It went from 9% in 1998 to over 20% in March 2026, according to data from the Mediterranean Foundation. In absolute terms, the number of self-employed workers contributing to the system grew from 513,000 to 2.2 million, an increase of 331%.

However, this greater number of contributors does not translate into an equivalent increase in the resources received by the system. While a salaried worker contributes, on average, the equivalent of 11.2% of their income, a self-employed worker contributes 5.2%, and a self-employed tax regime contributor contributes only 1.1%.

The gap is also reflected in nominal amounts. In March 2026, the average pension contribution of a registered worker reached $187,098 monthly, while that of a self-employed tax regime contributor was around $19,215, which is almost ten times less.

This difference between the contribution of a registered employee and that of a self-employed tax regime contributor is explained by the difference in categories and that most of the registered individuals are in the lowest brackets. More than half of the self-employed tax regime contributors making contributions to SIPA are registered in category A, while almost two-thirds are concentrated in categories A and B, which have the lowest billing and, therefore, make the smallest pension contributions.

"The regime has allowed millions of independent workers to enter the pension system who, otherwise, would likely remain outside of formality," the report emphasized.

But this greater participation of self-employed tax regime contributors coincides with a labor market where 44% of the employed work informally, representing more than nine million people who do not make pension contributions.

In addition to the problem of the Argentine labor market, demographic change is one of the main challenges. According to projections from INDEC, the population aged 65 and older will increase from representing 12% of the total in 2022 to 17% in 2040. At the same time, the aging index will double: while in 2022 there were 55 older adults for every 100 minors under 15 years, by 2040 that ratio will reach 115.

In this context, the system will face dual pressure; on one hand, a greater number of retirees and, on the other, a growing proportion of workers making smaller contributions.

Currently, income from personal contributions and employer contributions is insufficient to finance pension spending, which includes the contributory regime, moratoriums, the Universal Pension for the Elderly (PUAM), and bonuses. "SIPA records a deficit close to 2% of GDP and requires transfers from the National Treasury to finance itself," the cited report stated.

For the Mediterranean Foundation, the debate on a potential pension reform should not be limited to issues such as retirement age or access requirements, but should also incorporate the transformation that the labor market has undergone in recent decades.

Additionally, the study noted that, in the last three years, the average pension has lost 13% of its purchasing power, while the minimum pension with a bonus has fallen 20% in real terms. Meanwhile, about one million people over 65 continue to work, equivalent to 4.6% of the total employed.

"Informality and the increasing participation of contributors with reduced contributions have changed the structure of the labor market on which the system was built. Recognizing this transformation will broaden the diagnosis and contribute to the design of a more consistent and sustainable reform," the report concluded.

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