Finance Secretary Herrera announces new commission.
The federal government has reached an agreement with Mexico’s 10 pension funds that will reduce commissions and give a person entering the workforce today 10% more upon retirement.
The deal will see the commissions that workers pay reduced to 0.7% of their pension balance by the end of the government’s six-year term, Finance Secretary Arturo Herrera told reporters at the president’s Wednesday press conference.
“During the present administration, around 100 billion pesos [US $5 billion] will no longer remain with the pension funds but will go to workers’ accounts. This means that if a worker joins the workforce today, his pension will be 10% greater,” he said.
Herrera said that in 2008, pension funds were charging average commissions of 1.89% but that figure declined gradually over 10 years to 1.01% in 2018.
This year, during the administration of the new government, average commissions dipped below the 1% barrier for the first time to 0.98%, the finance secretary said.
“This decline of three basis points seems very little but it means almost 10 billion extra pesos in workers’ savings . . .” Herrera said.
He predicted that commissions could go as low as 0.63% in the coming years, which would be below the international standard of 0.7%.
Bernardo González, president of the Mexican Association of Pension Funds (Amafore), said that commissions have gone down by more than 90% since 1997, and that the funds have generated average annual returns for workers of 11% in nominal terms and 5% in real terms.
He said that the association supports the proposal to improve workers’ pensions.
“The pension funds join [the efforts] to achieve a pension system with international standards that benefits Mexican workers,” González said.
He added that Amafore is in favor of the implementation of a pension system reform to ensure that workers retire with pensions equivalent to 70% of their final salary.
According to data from the National Commission for the Pension System, the fund with the lowest commission rate in 2019 is the government-run Pensionissste, which charges state workers 0.82%.
Inbursa charges the next lowest commission rate – 0.95% – followed by Citibanamex and Banorte, both of which charge 0.96%. Azteca, Coppel, Invercap and Principal charge the joint highest commission rate of 1.04%.
Source: El Economista (sp)
