The state’s millionaire debt to the Ecuadorian Social Security Institute (IESS), which according to official data amounts to 10,151.9 million dollars, put the entity at risk of not paying pensions to retirees, as well as affecting the reserves of the Pension Fund. The lack of payments that has been occurring since 2012 has also accumulated in this Government, which stopped paying 1,250 million dollars for a 40% contribution this year alone.

This is revealed by the letters sent to the Minister of Finance Pablo Arosemena by two high bodies of the IESS, in which they insist that the Government make the payments owed by the state to the IESS, both for the obligations of 40 percent of the pension and for the health debt.

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The authors of the statement are IESS director Diego Salgado (via official letter IESS-DG-2023-0773-O dated August 18, 2023) and employers’ representative María de los Ángeles Rodríguez (Oficio IESS -CD-EM-2023-0009-O from September 19, 2023).

Letter from the director of IESS

In the first, Director Salgado determines the payments that await the Ministry of Economy. So, it shows that between January 2012 and June 2023, the state owes IESS 4,936.1 million dollars for 40%. That’s $3,851.4 million for contributions themselves and $1,084.6 million for interest generated.

The fact is that part of the debt of 40 percent refers to the debts of the previous governments and the current one. Furthermore, the Pension Fund was affected when for three years the regime of Rafael Correa promoted – and the related Assembly approved – the non-payment of that 40%, claiming that there was sufficient liquidity. In addition, Salgado points out in the letter that there is a debt of $4.83 billion for Health. This, although this Government has recognized it, has yet to be made official. These are the items that make up the aforementioned million dollar debt of $10,151.9 million.

Letter from the employer’s representative in the Board of Directors

Meanwhile, in the latest letter dated September 19, María de los Ángeles Rodríguez insists on the concern, which she has already expressed in communication with the Government, about the serious situation the institution is going through, “faced with a high risk of non-payment of payments to pensioners, as well as the delay caused by payments to external service providers.”

According to the letter, due to the non-payment of state obligations to IESS, for 40% and other pension items, the institution “was forced to divest from the portfolio of the pension fund, managed by Biess, approximately 480 million dollars, so that far in 2023; “an amount that could be $1,511 million by the end of the current fiscal year.” This contradicts the financial and actuarial sustainability of the mentioned fund, decapitalizing it and creating lost profits, he told the minister.

It is also pointed out that while the Ministry of Economy and Finance has stopped transferring to IESS, so far in 2023, approximately $1,250 million for 40% contributions and other pension items, Biess has invested approximately $1,627 million in Ecuadorian government bonds during the same period , which shows that “IESS funded the general state budget, at an approximate total value of $2.877 million with the resources of IESS affiliates, retirees and beneficiaries across the country.”

In any case, Rodríguez is asking the Government for an appointment so that he can seek solutions and a payment agreement.

Protests of pensioners

For Henry Llanes, president of the National Front for the new IESS, the information revealed by these official data letters is very important. He explains that the Government’s delay in paying the public debt to the IESS has dangerously decapitalized the financial viability of the health and pension fund of the mandatory social insurance, which are financed monthly by the contributions of members and employers of this insurance. the financial sustainability of their benefits is called into question,” he says.

He also claims that the Government “in a way sui generis, To put it mildly, with the decree sent to the Constitutional Court as an emergency in economic matters, he does not want to pay interest on the debt.” For Llanes, this is the same as telling national banks (public and private) not to charge interest to their borrowers. They would never accept such a proposal, much less if they wanted to do it through the law of the Republic.

Indeed, a few weeks ago, the President of the Republic, Guillermo Lasso, sent the law on the balance, organization and transparency of public finances to the Constitutional Court. This decree, in Article 31, as the thirty-fifth provision, establishes the prohibition of charging interest to the state for debts. IESS would be among those affected by this measure.

The text states: “The collection of interest and/or fines arising from untimely payment of goods, purchased services, as well as for periodic contributions, contributions, fees and/or registration is prohibited, provided that this occurs between public entities that are part of the general state budget. Public universities and polytechnics are excluded from this ban. Interests, fines or other costs related to state guarantees can be collected in public debt transactions contracted by subjects of the general state budget.

In the case of the interest of IESS, this would mean not canceling the previously mentioned 1,084.6 million dollars that appear in the letters sent to the Ministry.

Several pensioner organizations went to the Court on September 21 to present themselves amicus curiae to reject this claim in the decree law.

In the meantime, Llanes assures that in the coming days he will take various measures to pressure the payment of the debt.