• OVERHAUL: The López Obrador administration and Mexico’s top business lobby (CCE) have agreed on an overhaul of the country’s pension system for workers in the formal economy aiming to increase the percentage of Mexican workers enjoying a retirement pension estimated today at 30%.
• PROPOSAL: The reform would increase Mexican employers contribution to individual retirement accounts from 5.150% of the worker’s base salary to 13% in a period of 8 years. It would also reduce the number of contribution weeks required to enjoy a pension from the 1,250 to 750.
• PACKAGE: “The new scheme begins to run until 2023 when the pandemic passes. And it will add an additional percentage point for 8 years. Our suggestion to all companies is that (the percentage point) be negotiated within the benefits package”, said Carlos Salazar, the head of CCE.
• CONTEXT: In 1997, Mexico underwent a major pensions reform towards a defined contributions (DC) scheme with private companies managing funds and benefits linked to deposits in individual accounts (AFORES). There are currently 65.8 million AFORE accounts.
