Court endorses 4Q reform to the pension system

Victor Fuentes/Reform Agency

Wednesday, November 23, 2022 | 2:48 p.m.

Mexico City.– The Supreme Court of Justice endorsed today, for the first time, the 2020 reform to the retirement contribution system, in particular, the increase in payments that companies must make, which will begin to apply in January 2023.

Unanimously, the Second Chamber of the Court denied the amparo to a company that alleges that it is disproportionate to leave financing of the pension scheme for unemployment in advanced age and old age almost entirely in the hands of employers.

Before the December 2020 reform to the Social Security Law, and still until December 2022, employers contribute 3,150 percent of the contribution base salary to finance this pension, workers 1,125 percent, and the State, the 7.143 percent.

Starting in January, employers will have to gradually increase this quota, until it reaches a maximum of 11,875 percent of salary in 2030 for those who earn more than 4 Measurement and Update Units (UMA), that is, 11,700 pesos per month. .

The reform eliminated the obligation of the State to contribute this quota, and only left the so-called “social quota”, which is a fixed amount in pesos, not a percentage of salary.

The new social quota only obliges the Government to contribute for those who earn up to 4 UMA -or up to 7 UMA only during 2023-, while in the law that will expire in 2022, it has to contribute for those who earn up to 15 minimum wages, almost 77 thousand 800 pesos per month In addition, the contribution of 1,125 percent of the workers was left unchanged, so it will be the companies that will bear almost all the weight of increasing these pensions.

“By transferring all of the pensioner’s savings in the retirement, severance at advanced age and old age branch, to the employer, it makes its sustainability impossible, because the employer will never have the economic capacity of the State,” he stated in his under the company Dados, Dies and Molds.

The Second Chamber, however, rejected that the principle of tax proportionality be violated.

“The violation of the principle of proportionality cannot be understood from the participation that other subjects make or not in the contributions or taxes that are set, since this only refers to the specific scope of each of the entities obliged to contribute to the expense public,” the ruling states.

“The indicated percentages cannot be considered disproportionate since they attend, precisely, to the increase in the contributive capacity that is reflected in the worker’s salary as a result of the increase in income obtained by the employer, since with the percentages provided by the legislator achieves that those subjects who pay higher salaries contribute to a greater extent to the provision of the public health and social security service,” he adds.

The ruling acknowledges that the “social quota” in charge of the State is not equivalent to the 7.125 percent contribution that has operated since the 1996 reform that created the retirement system, but it also affirms that it is a way for the Government to “assume its social responsibility.

“Social security must be considered as a social good and not as a commodity or an instrument of economic or financial policy, and, therefore, it must be estimated that the contributions to this end result in an important factor for inclusion and social cohesion , as well as the reduction of poverty”, concludes the sentence, whose criteria will be mandatory for all the judges of the Country who know of appeals for this issue.

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