Thursday, June 13, 2024

Pension fund commission reduction will give retirees 10% more

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) 

Have something to say? Paid Subscribers get all access to make & read comments.
Refugees displaced by an armed attack on their Chiapas town stand in the bleachers of a open air sports court and look at proceedings below through a protective wire fence

Over 4,000 residents flee Chiapas town following armed attack

2
Thousands in the Chiapas town who fled a June 4 armed attack by a criminal group refuse to go home until authorities can ensure their safety.
An endangered vaquita swimming in the ocean

May vaquita porpoise survey finds fewer specimens than in 2023

0
The survey, which takes place annually in Mexico’s Upper Gulf of California, recorded the lowest-ever number of individual vaquitas.
Man in uniform and hard hat spraying auditorium seats for mosquitos, surrounded by pesticide fumes.

Study shows dengue cases in Mexico primed for widespread expansion

0
As dengue cases in Mexico continue to rise in 2024, a new study predicts that the mosquito-borne virus will affect 81% of Mexico by 2039.