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(CNN Spanish) - The current debate in Mexico is about whether or not to increase the retirement age for workers.
This Wednesday, the Secretary of the Treasury of Mexico, Arturo Herrera, said it is necessary to increase the pension age in the country, according to him, for citizens to have a decent pension.
"The sole purpose of pension funds is to guarantee a decent retirement for workers," he said. “If the workers do not consider it appropriate, it is finally their retirement. We will not make any measure of these if it is not agreed with the workers, ”said Herrera at the inauguration of the Fourth Afores Convention, cited by Expansión, a CNN affiliate in Spanish in Mexico.
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The proposal was not accepted by President Andrés Manuel López Obrador, who said Thursday that during his government the ages for retirement - 65 years for men and women - will not increase.
“I don't agree with the retirement age being extended,” said López Obrador. "Once I express it, as long as I am president, the age will not change as far as we are concerned, that is, there will be no proposal to increase the retirement age."
"It should not increase the retirement age," AMLO told reporters later.
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Retirement age
Mexico is among the countries that have the highest retirement age in Latin America. As in Costa Rica and Peru, in Mexico a person who wants to retire must be 65 years old.
In Venezuela and Bolivia, retirement ages are lower. In the first, men retire at 60 and women at 55, and in the second, at 55, men and 50, according to the Social Panorama of Latin America 2017 report, published by ECLAC on last year. This report gathers data from the year 2015.
In Ecuador, the retirement age is according to the amount of contributions to the pension system and having completed a minimum of weeks quoted, according to the Ecuadorian Social Security Institute (IESS).
There is not a single pension model
In the last three decades, pension systems in Latin America have undergone several modifications and different models have been established, either the individual capitalization scheme or the traditional public distribution scheme.
“The structural reforms established different models of pension systems, confirming that there is no single model for Latin America,” says the Social Panorama of Latin America 2017 report, published by ECLAC last year.
This table shows the different reforms to the pension system that have been made in the region in recent years, and the current model to 2018, according to the report by ECLAC. (Credit: ECLAC)
There are several models that apply in the region.
Distribution model: It is based on an intragenerational contract in which the contributions of active workers finance the pensions of retirees. This model is present in 10 countries and in five more constitutes a part of the pension system, says ECLAC.
Parallel model: It is where workers must choose between the public system or the individual capitalization system, “therefore, both systems are exclusive and coexist competing for the affiliates,” says the ECLAC report. This type of model is in Peru and Colombia.
Mixed model: Under this model, the public distribution system and the individual capitalization system are complemented by what the affiliates belong to both systems. Uruguay (1996), Costa Rica (2001) and Panama (2008) have this model.
Substitute model : This model completely replaces the public pension scheme with an individual capitalization system that is managed by the private sector. Some of the countries that adopted this model were Chile, which in 1981 was a pioneer in its type and was a model for several countries in the region; Bolivia adopted it in 1997, El Salvador in 1998, and the Dominican Republic in 2003.
However, in Chile the system was reformed and in 2008 an integrated or parallel pension system was integrated, explains the ECLAC report. For 2017, it was studied how to increase the participation of the State “to consolidate the integrated model,” says the agency. Opponents of the Chilean model sought to eliminate the Pension Fund Administrators.
In Bolivia with a 2010 reform, the pension system became state. And in El Salvador, in 2017, a pension system reform maintained the individual capitalization system and added a collective savings fund called the Solidarity Guarantee Account.
The Dominican Republic and Mexico still have private pension models, a model that according to ECLAC, "shows clear signs of exhaustion in the region."
Pensions
