The congress passed the reform on Tuesday night with 127 votes to 118, as protestors threw rocks and fireworks outside the building, injuring a number of police officers.

The reforms will change the formula used to calculate pension benefits by indexing them to inflation, which is expected to lower the amounts paid.

One of the most controversial changes to the pension system is moving retirement age from 65 to 70 from men and from 60 to 63 from women.

Protestors fear the changes will have negative impact on the poor. At least 100 people were injured by the protests, with dozens arrested.

The pension reforms are a key element of plans aimed at reducing the fiscal deficit, which has been a hurdle for the country over the past century.

The reform is seen as a major victory for president Mauricio Macri and to further boost the economy. The government will save around $3.8bn from the changes to the pension system.

According to Eurasia Group, the reform would also make it easier to reach the 2018 primary fiscal deficit target of 3.2% of GDP, the Financial Times reported.

Macri was elected in 2015 and has vowed to press ahead with austerity measures as part of pro-market reforms, following the parliamentary elections earlier this year where he consolidated his governing coalition’s power.

Tax reform proposals have also been approved by the Senate and are due to be debated by the lower house.

The OECD warned earlier this month that further reforms were needed globally to cope with ageing populations as public spending on pensions across the world was significantly increasing.