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“I will continue working after 65”: the reality of retirement in Mexico

2022-07-03T15:58:56.077Z


25 years after their creation, the Afores have not given the expected results for workers At almost 60 years old, Sergio López recognizes that he will not be able to retire to take care of his grandchildren, as was his plan a few years ago. “They hired me for the first time about 18 years ago, they fired me and with what I have in the Afore it will not be enough for me at all”, he refers in consultation. In order to achieve greater savings in his Retirement Fund Administrator (Afores),


At almost 60 years old, Sergio López recognizes that he will not be able to retire to take care of his grandchildren, as was his plan a few years ago.

“They hired me for the first time about 18 years ago, they fired me and with what I have in the Afore it will not be enough for me at all”, he refers in consultation.

In order to achieve greater savings in his Retirement Fund Administrator (Afores), López looked for a job with a salary slightly higher than the minimum wage in which he will work, according to his accounts, about five years to be able to retire with a pension of a little more of 5,000 pesos (almost 250 dollars) per month.

Twenty-five years after the creation of the Afores and the reform of the Retirement Savings System, the first workers to reach retirement age under this scheme are looking at it black to be able to have a decent retirement.

According to data from the National Retirement Savings Commission (Consar), up to May this year, 32,220 workers have retired under the scheme of the 1997 Law, which considers the savings made in retirement as the only source for the pension. the Afores.

“I will have to work longer so that they give me a little more, the minimum (pension) is nothing,” says López.

The last reform that Mexico made to the pension system in December 2020, allows workers to retire with a minimum pension guaranteed by the Government, which is approximately 4,250 pesos per month (almost 200 dollars).

Iván Pliego Moreno, president of the Consar, explains in an interview that the latest reform allows workers to retire with more dignified conditions and with less working time.

Before, employees required to work 1,250 weeks (just over 24 years) to be able to access their pension, while from 2021 750 weeks (just over 14 years) are required, which will gradually increase until reaching 1,000 weeks ( about 20 years).

“At the center of the concerns and proposals are the interests of the workers, it is a change of vision”,

Despite the contributions made by employers to retirement funds, the pensions of workers belonging to the Afore Generation will continue to be low.

Marilú Jáquez, 37, believes that she is going to have to continue working for many years, since she does not have enough to save for her old age.

"I received an account statement and according to a simulator I am going to retire with 3,000 pesos," she mentions in consultation.

For the Afores to work, it is not enough for the companies to contribute more money to the retirement funds.

Moisés Pérez Peñaloza, head of retirement at Aon Latin America, mentions that the lack of financial education has not rebounded in more than two decades of the reform that saw the birth of these administrators.

"To correct this course, for the sake of a complex scenario, of high longevity and with a high cost of private health, in addition to the occupational issue," he mentions in an interview.

“If you stop working, what are you going to do when you reach 85 years old?” he reflects.

Like Jáquez, Mexicans don't have time to think about their retirement.

Although the levels of voluntary savings (for workers affiliated with the Mexican Social Security Institute) and solidarity savings (for workers of the Mexican State) have been growing since 1997, less than 2% of workers make contributions of their own free will.

While the Afores manage more than 7 billion pesos, conscious savings reached 155 million pesos in May 2022.

That there is no money that is enough or that they do not believe they will reach the age of retirement from work (65 years in Mexico), the National Survey of Financial Inclusion shows that 73% of the elderly plan to pay their expenses in old age with government support .

"Informing, disseminating financial education is one of the great challenges of the entire industry," says Pliego.

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Source: elparis

All news articles on 2022-07-03

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