Sheinbaum Clarifies Proposed Pension Fund Will Not Impact Existing Afores

Proposed pension reform in Mexico aims to provide dignified retirement for low-wage workers, with unclaimed funds managed by the central bank. Implications for retirement security ahead of 2024 election.

Aqsa Younas Rana
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Sheinbaum Clarifies Proposed Pension Fund Will Not Impact Existing Afores

Sheinbaum Clarifies Proposed Pension Fund Will Not Impact Existing Afores

Claudia Sheinbaum, the presidential candidate for Mexico's Morena party, has clarified that the proposed Welfare Pension Fund aims to provide workers aged 35-40 with a dignified retirement, assuring that existing Afores retirement accounts will remain untouched. The proposed pension reform seeks to ensure that workers earning less than the average wage and registered with the Mexican Social Security Institute (IMSS) receive 100% of their last active salary upon retirement.

President Andrés Manuel López Obrador reiterated that workers will not lose their right to retire even after turning 70, despite the approval of the new pension fund. The Supreme Court recently ruled against Afores keeping unclaimed resources, and the government has proposed that the Bank of Mexico (Banxico) manage these funds instead. The reform is not expected to significantly impact active workers' Afores accounts, only inactive or unclaimed accounts.

The financing sources for the Welfare Pension Fund include the National Institute for the Recovery of Stolen Goods (INDEP) and companies under the Ministries of National Defense (SEDENA) and Navy (SEMAR). President López Obrador expressed hope for the swift approval of the reform by May 1, which is Labor Day in Mexico.

Why this matters: The proposed pension reform has significant implications for the retirement security of millions of Mexican workers. It aims to address the issue of low retirement incomes and ensure a dignified retirement for those earning below-average wages.

In addition to the pension reform, the government is also addressing water scarcity issues in the country. This includes drilling new wells in Mexico City and restricting water concessions to prioritize domestic water needs over industrial use. As Sheinbaum, a leading contender for the presidency, clarifies the details of the proposed Welfare Pension Fund, the debate over retirement security and the management of unclaimed pension funds is set to remain a key issue in the lead-up to the 2024 presidential election.

Key Takeaways

  • Proposed Welfare Pension Fund to provide 100% of last salary for low-wage workers
  • Existing Afores retirement accounts to remain untouched, and unclaimed funds are to be managed by Banxico
  • Financing sources include INDEP, SEDENA, and SEMAR; reform aims for approval by May 1
  • Pension reform to address low retirement incomes and ensure dignified retirement
  • The government also addressing water scarcity issues, a key issue in the 2024 election