Pemex and union agree to pension reform

Mexican state-owned oil company Pemex and its union agreed to reduce generous pension benefits for workers, the company said on Wednesday, in a move that will improve Pemex's balance sheet amid low prices and slumping output.

The new pension scheme allows the company to pass part of its nearly US$90 billion unfunded pension liability to the government.

A landmark energy overhaul finalized last year permitted the Mexican government to absorb a portion of the pension liability provided it negotiated a leaner scheme with the union.

According to the deal, Pemex employees who have been at the company for less than 15 years will be able to retire with 100 percent benefits after reaching 60 years of age and completing 30 years at the oil giant.

Formerly, workers could retire on full benefits at age 55 with 30 years at the company.

Under the plan, new employees will have individual accounts funded by contributions from both the worker and the company, Pemex said, adding that current unionized workers can also opt into the scheme