The recent announcement of a reform to the system of pensions, which was built with the agreement of the organizations of workers, employers and the Federal Government, is of great relevance to the country.
We all agree that the reform of the National Pension System must put the Mexican worker at the center. Currently very few workers meet the requirements to access a pension. Only 25% of the generation Afore will be eligible for a guaranteed minimum pension. Worse still: the few who manage to meet the pension requirements will only receive between 20 and 30% of their last salary. Of the 55.6 million Mexican workers, only 11% (6.08 million) will have access to a pension that will not even be enough. This is the current reality of our Pension System.
It should be ensured that the reform to Retirement Savings System Take into account the harsh reality of retirement in our country and seek to solve current problems: scope (reaching more Mexicans), sufficiency (that retirement income is the closest thing to income before retiring) and solvency (which resources are reserved and professionally invested). The gradual increase to 15% in compulsory savings is a highly relevant proposal, and it cannot be postponed due to the evidence that 6.5% is not enough for workers to access a decent pension. This increase in savings would guarantee a sufficient income so that older adults can cover their basic needs and enjoy a decent retirement: the greater the savings, the better the pension. Similarly, the reduction from 1,250 to 750 weeks necessary to be entitled to a pension would allow a greater number of Mexicans to access the pension system, considering that, given the conditions of the Mexican labor market, a worker, on average, only manages to contribute only 14 years to social security.
Now, we must not lose sight of the fact that one of its primary objectives is that the largest number of Mexicans can access a decent pension, including the 31.3 million workers outside the formal sector, who represent 56.2% of the employed population. Likewise, it is of great relevance to consider that the approximately 20 million independent workers (doctors, service providers in various trades, artists, journalists, drivers of transport platforms and delivery drivers, and a long etcetera) have a retirement scheme that today they do not have the essential protection to have an income at the end of their working life. The initiative of Reform to present itself to the Legislative Branch, must take into account that working conditions in Mexico have been modernized in the last 25 years; You should consider including independent workers under the compulsory contribution scheme using figures such as the Personal Retirement Plan, which may well be added to the complementary account of the Afore and even invite other relevant actors of the financial sector: brokerage houses, insurers, banks, investment company operators, in conditions similar to the rest of the workers, accessing a minimum pension guarantee according to their savings.
Capture mechanisms already exist. Both in the payment of taxes for independent workers (ISR and VAT) and in the Retirement Savings System (physical commercial networks and mobile devices). As of today there are 66 million individual accounts in the Afore within which workers, both formal and independent, can increase their savings, benefiting from the interest rates that the Afore have given to the system (4.5% real, for above inflation). By benefiting formal workers with benefits, voluntary and complementary retirement contributions can be supported, facilitating tax deductibility. Through successful models in other countries (ie UK / NEST), an optional entry scheme was developed (opt in) for workers with up to 3 minimum wages and an optional exit scheme (opt-out) in which workers are automatically enrolled in the savings program and they decide whether to stay or not. Both schemes allow companies to retain the long-term savings of all their employees. The proposal to improve the pension conditions of workers who participate in the formal economy is a great advance that we cannot stop celebrating and under no circumstances should we stop. It is worth celebrating for the good of Mexico. But thinking about comprehensive development, it is not feasible to leave more than half of the country’s workforce out of social security. Only considering our real employment situation, we can achieve a comprehensive reform that contributes to preventing poverty in the old age of millions of Mexican workers.
National President of COPARMEX