COLUMN ONE : When the Safety Net Unravels : Throughout Latin America, social security systems have gone broke or are in dire straits. And angry pensioners are demanding their due.

Miguel Pla worked a lifetime with the expectation that a respectable pension awaited him when his working years were over. And so it was. Pla retired from his job as a bookbinder in 1985 and began collecting his monthly check from the Argentine government system. “It was enough to live on,” recalls Norma Pla, his widow. “It was plenty.”

At 62, she has continued to collect the checks. But ravaged by the effects of Argentina’s rampant inflation, they no longer provide security. And like Mrs. Pla--now famous as a leader of street demonstrations by retirees--millions of Argentine pensioners receive only a fraction of what their system promised.

Once one of the most generous in Latin America, the Argentine social security system has gone broke. Similar systems throughout Latin America are either in financial trouble or heading for it--further evidence of Latin America’s failure to achieve the kind of economic and social development that governments, political movements and labor have strived for since early this century.

The idea of a welfare state that would provide a safety net for most of the population has long been part of the legal and ideological fabric of Latin American nations. But there has never been the collective wealth and organizational efficiency needed to make such expensive systems work for long.

Crushing foreign debt, economic decline and soaring inflation in the 1980s proved too big a burden for pension systems. Shaky ones collapsed, and healthier ones trembled.

While in some countries government retirement benefits are relatively new and cover only a small part of the population, other systems date to the 1920s and 1930s and provide widespread coverage. These older, bigger systems are among those with the worst problems.

With most government pensions, it’s pay as you go. Retiree benefits are paid out of the paychecks of today’s workers, mostly through social security taxes. Such a system works fine when pension systems are new, or expand fast; the overwhelming majority of participants pay into pension funds rather than draw retirement checks. But in Latin America’s older systems--especially in countries where birthrates have plunged and life expectancy has soared--benefits have outstripped the workers’ contributions.

Fears of such a phenomenon have haunted the huge U.S. Social Security system as well amid expectations that a giant Baby Boom generation would swell retirement rolls. However, a Latin American-style fiasco--certainly anytime soon--is generally regarded as highly unlikely. A recent report by Social Security trustees said U.S. retirement and disability funds would not run out of money until the year 2041, when Baby Boomers would be in their 80s and 90s, and the federal government has always taken steps in the past to keep the system solvent.

In Latin America, where private company pension plans are uncommon, bankrupt government-sponsored retirement systems have been a reality for years.

Pensions are so poorly financed in Brazil that 9 million of the country’s 12 million retirees receive half of an average minimum salary, or about $35 a month. A $5.9-billion backlog of unpaid contributions has worsened matters. And to top it off, the Brazilian system has been rocked by scandals this year over multimillion-dollar frauds. The news magazine Veja called the system “a nest of thieves that pays miserable pensions.”

Uruguay, which had the most advanced social welfare system in the region, has been forced to make reform after reform to avoid a pension plan collapse. Uruguayan retirement, health and disability costs at one point equaled 15% of the country’s economic production and 62% of its government budget. Uruguay’s system is still “potentially in bankruptcy,” said one economic consultant.

“History suggests that social security is a stairway into the void,” concluded a study published by the U.N. Economic Commission for Latin America.

Nowhere are problems more acute than in Argentina.

By law, a full pension in Argentina is equal to 82% of the average of the three best monthly salaries earned in the last three years of work, adjusted for inflation. But the system is generally paying less than half what the law requires--a maximum pension of about $150 a month, recently increased from $120.

“What you have here is a feeling that there is a huge swindle,” said sociologist Atilio Boron.

Norma Pla, a pale-eyed woman with badly decayed teeth, said her check does not come close to covering food, utility bills and property taxes, so she must rely on support from her grown children. She lives with two single children in a small, three-bedroom home that she and her late husband built with their own hands.

“I have my house, such as it is, but there are other grandparents who don’t,” she said.

Some elderly Argentines are forced to sleep in train stations and under viaducts, but such extreme hardship is not widespread. “Luckily, there aren’t many homeless,” sociologist Boron said. “The family is much more supportive here than in the United States.”

Still, many Argentines seem to ignore the growing desperation of cash-strapped retirees. For two years, Pla led marches by groups of retired people every Wednesday from the presidential palace to the Congress. Hardly anyone paid attention. “All of us grandparents,” she said, “were invisible.”

Then Pla and some of her friends camped out in downtown Buenos Aires on Plaza Lavalle. Sometimes more than 100 demonstrators spent the night. As publicity stunts, they brought in a cow and planted a garden. Finally, Argentina took notice, and Pla became a celebrity. In one highly publicized encounter, she evoked tearful words of sympathy from the economy minister.

After 70 days, police in early June evicted the plaza campers. Since then, they have arrested Pla twice on charges of disobeying authorities by distributing food in the Plaza. But she continues to lead protests.

It isn’t that the government has cut pensions outright. No Argentine politician would dare.

But the government refused to adjust pensions to compensate for double-digit monthly inflation as President Carlos Saul Menem has sought to avoid deficit spending and its own inflationary effects. Incomes, buying power and living standards have shrunk.

Mounting anger is the result, as is evident among those who march in protest:

* Maria de Fernandez, a widow who lives with a daughter and two teen-age grandchildren in a two-room apartment. Fernandez receives a pension but needs to supplement it by working part-time as a maid. “I put money into the system for 40 years,” she said. “Today I am 70 years old and I’m still working.”

* Rafaela Carmen Garcia, 66, a former bookkeeper who has never married. “I rented an apartment all my life, but now I have to live in a rooming house,” she said. An unfurnished room with no meals costs her half of her pension. “And in addition, I have to pay electricity. There’s a meter in the room.”

* Teodoro Garcia, 71, a bachelor who lives with two retired brothers. “I worked my whole life--for what?” he asked. “I had a car. I don’t have one anymore.”

* Maria Isabel Zuniga, 79, a former shirt-factory worker who lives alone in a two-room shack on an unclaimed lot. Zuniga grows her own greens in a small garden. “If I didn’t, what would I do, buy vegetables? That’s crazy. How could I afford it?” She drinks a lot of mate tea. “There are days when I have mate and nothing else. But I don’t want to beg.”

Gen. Juan D. Peron, the populist president of Argentina from 1946 to 1955, did more than anyone to expand the retirement system. Women can retire at 55, men at 60. A widow who worked can receive her husband’s pension as a survivor and her own as a retiree. A woman widowed more than once can receive a survivor’s pension for each of her late husbands. You don’t have to have contributed to the system for your entire working career to get benefits from it.

Abuse is apparently rampant. In some provinces, more than one-third of all pensions are for alleged disabilities. “There must be fraud,” said Walter Schulthess, the social security administrator. “There are doctors and lawyers who make this situation possible.”

The system requires employees to pay 15% of their salaries in taxes; employers are supposed to contribute 35% of each employee’s salary toward retirement. Yet many self-employed workers cheat on contributions. While under-reporting their real earnings, they make the minimal contributions required to establish pension eligibility. Payments into the system finance only about 10% of the cost of pensions for 1 million retired, formerly self-employed workers.

The number of Argentines drawing pension benefits gets ever closer to the number contributing to the system: In the 1950s, when the system was new, seven workers paid in for every one who received benefits. Now, the ratio is 1.8 to 1.

Compounding the system’s woes, the old now live longer than they did in the 1950s. And many more people engage in what Schulthess calls “black work”--unreported jobs for which they do not pay retirement taxes.

The pension system’s design gets most of the blame for its problems, but analysts also point to the way it’s administered. The government helped contribute to insolvency by borrowing from retirement trust funds to issue inflation-plagued public bonds, said Daniel Artana, an economist with an Argentine research foundation.

The system’s financial woes are now self-fulfilling. “Workers don’t pay because they know they would be throwing their money into a black hole,” Artana said. As many as one of every two workers figure out how to avoid contributing, studies indicate.

The retirement program still receives about $400 million a month from contributions and $100 million more from a special gasoline tax. The total income of $500 million is what the system spends each month; if it were paying the full pensions required by law, it would be spending $800 million to $850 million.

The government, which acknowledges it has underpaid retirees a total of $6.5 billion, is working on a long-range overhaul plan. Authorities here and in other countries are studying the reformed system in neighboring Chile for ideas.

In Chile, the military regime in power a decade ago revolutionized the government retirement program by switching to a system of privately administered pension funds. In a decade, these individualized, private accounts have accumulated a total of $8 billion, or one-fourth of Chile’s annual gross domestic product. The money is safely out of the reach of government administrations and forms an important source of funds for Chile’s thriving capital market.

But for Norma Pla, tomorrow’s reforms will be too late. The time for worry is now.

Wearing a beige coat and a white muffler, she led about 100 marchers down Roque Saenz Pena Avenue toward the government buildings on Plaza de Mayo recently.

“ Jubilados humillados !” they chanted. “Humiliated retirees!”

When the group approached the Ministry of Economy, a guard closed the building’s big brass doors, leaving the pensioners out on the steps.

Norberto Horacio Paso, a 66-year-old man with a Hemingway beard, seized the moment to make a little speech.

“We come to reclaim our dignity,” he said. “We have been workers for a lifetime. They should give us what is ours. They stole from our funds. We are not asking for alms.”