At the inauguration of the Social Security Week in the Chamber of Deputies “Analysis and perspectives of the pension system in Mexico”, which began yesterday, legislators called for reflection on the pension systems that exist in the country, since some of they are no longer economically and financially viable.
Ivonne Cisneros Luján, president of the Social Security Commission of the Chamber of Deputies, commented in her participation that the pension systems in Mexico have to be rethought because they have challenges to maintain themselves.
“We need to rethink pension systems, we don’t just have a system. We have various systems and some that are still supported by a solidarity organization, such as the pension system of the state of Veracruz, and others that have challenges to maintain themselves. Today in this week of social security we are going to rethink it,” said Cisneros Luján.
The social security system is highly fragmented, in close to 3,000 contributory and non-contributory pension programs, without connection to each other, which increases the cost of granting pensions, since different coverages are presented, according to a report by the Group of Work for the Treasury Transition elaborated in the last legislature.
There are multiple institutions responsible for different pension systems, such as the Ministry of Finance, the National Commission of the Retirement Savings System (Consar), the Ministry of Labor, the IMSS, the ISSSTE, the Ministry of Welfare, state institutes and public universities.
Ignacio Mier Velazco, president of the Political Coordination Board (Jucopo) of the Lower House, mentioned that although social security is a cornerstone for the future of workers, it also represents a crossroads in the economic viability of public spending and the country’s tax policy.
The President of Jucopo mentioned that the foregoing also impacts the state and municipal spheres since the pension system is collapsing the finances of the federal entities and state organizations such as the social security institutes for workers in the states.
“It is also already having an impact on at least 50 municipalities in the country, which is why it is one of the most important challenges of this century. Not only for our country, but for a good part of the countries in which the demographic dividend faces the problem of pensions”, said Mier Velazco.
Changes, but not fundamental
Prior to the inauguration in the Chamber of Deputies, the activities were opened at the former headquarters of the Senate of the Republic in the Xicoténcatl mansion. In said venue, Guillermo Zamarripa, president of the Mexican Association of Afores (Amafore), spoke on the subject.
“It is a fact and a reality that most states have made changes in the last 15 or 20 years to their pension laws. It is also a reality that parameters have changed, but the problem is that they have not changed the model and this leads to pensions being paid with public resources”, said Zamarripa Escamilla.
The former public official specified that, four years ago, in 13 states of the country the retirement age was 63 and 65 years, but in close to half of the entities the retirement age was 58 years or less, while At the state level, life expectancy was greater than 73 years, he said.
They have already talked a lot (in this forum) about the reform –to the social security law– of 2020 and how good it is and that it really is a step forward, but when compared to what is happening in other pension schemes in the government, mainly at the state, municipal and university levels, there is a very serious pension problem in the country,” said Zamarripa.
Civil society organizations, such as the Centro de Estudios Espinosa Yglesias, have proposed creating a pension law and a pension institute that grant institutionality and governance to the entire system, design changes to it, and coordinate its administration.
Recovering from disabilities
On his occasion, Iván Pliego Moreno, president of Consar, explained that the Retirement Savings System (SAR) is recovering the losses registered in 2022 and that is why at the moment the requests for transfer of accounts between retirement fund managers (afores).
“The great responsibility that Consar has is to ensure the proper collection of workers’ resources and that is why at this time it is not possible to conclude the transfer requests, because we are still in the recovery of the enormous losses that we witnessed last year ”, explained Pliego Moreno in the panel “Reform of the 2020 pension system, and the state pension systems”.
Since December, Consar reported that transfers were suspended due to losses that impact the system. However, workers can start the process even if it is not finalized because the Afore has to liquidate the portfolio to transfer it and with this the disability would become a loss.
Last year the capital losses in the SAR totaled 215.477 million pesos, with which they recorded a historical amount in the 25 years of existence of the system.
“Due to the nature of the investments, the Retirement Savings System has registered periods of high volatility and we saw it recently in 2022 (…) Capital losses do not represent losses, despite the fact that we see reduced amounts in our account statement or in the results that Consar publishes monthly”, mentioned Pliego Moreno.
