• REFORM: Mexico’s top business lobby (CCE) will put forward a proposal of major reform to the country’s pension system by increasing employers’ contributions to worker’s accounts, in an effort to avert the looming crisis of few Mexicans being able to enjoy a retirement allowance.
• CONTRIBUTIONS: Under the current system, employers contribute 5.150% of the worker’s base salary to an individuals’ retirement account. According to sources, the CCE’s proposal seeks employers’ contributions to gradually increase to 13% in a period of 8 years.
• CONTEXT: Starting in 1997, Mexico underwent a major pensions reform towards a defined contributions (DC) scheme with private companies managing the funds and benefits linked to deposits in individual accounts (AFORES). There are currently 65.8 million AFORE accounts.
• WEEKS: The private sector proposal will also seek to reduce the number of contribution weeks required to enjoy a retirement pension from the current 1,250 to just 750. Under the current model, only 30% of Mexican workers with AFORE account will be able to reach the threshold.
