Mexican government to lower fees on pension funds

Finance minister Arturo Herrera announced that the Mexican government signed a deal with the company Amafore and the National Commission for Retirement Savings for the benefit of future pensioners

Mexican government to lower fees on pension funds
Mexican workers have to save money for their retirement – Photo: File photo/EL UNIVERSAL
English 28/08/2019 18:42 Newsroom Mexico City Actualizada 18:51
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The Federal government, through the Finance Ministry, signed a deal with the company Amafore and the National Commission for Retirement Savings (Consar) to lower fees on retirement funds (Afores) to benefit the retirement of workers so that they have better pensions.

In the morning press conference of President Andrés Manuel López Obrador, the Finance minister, Arturo Herrera, detailed that the fees went from 1.01% in 2018 to less than 1% this year.

The decrease in fees will be destined for retirement funds of Mexican workers.

José Bernardo González Rosas, president of the Mexican Association of Retirement Funds Administrators (Amafore), said that they are looking to prevent Mexicans from having minimum pensions because Afores are a fact of social justice.

In addition to the announcement, he asked the reform of the retirement system to be carried out and to adjust the pension system to the reality of workers.

This decision comes from the issue that the Mexican working class is spending their retirement funds before they become pensioners. What now seems like a relief could be a serious risk for their future because if they do not replace the money, this could delay their retirement date; also, people will receive less money once they retire and their pension will be lower.

Current unemployment rates have caused workers to make disposals of Afore resources, which reached their peak in July. During that month, people withdrew MXN $1,204 million from their retirement funds. From January to July, the total was MXN $6,658 million, 28% more than during the same period in 2018.

Although partial disposals are part of the rights of workers, they have a negative effect on the amount they will receive when they retire, as well as in the weeks of contribution. Workers will have to pay back these concepts so as not to affect the income they would receive when becoming pensioners.

“Every time a worker resorts to his Afore because of unemployment, he is taking away weeks of contribution and balance for his retirement. However, I also believe that it is an advantage to have an Afore, it’s when you see its worth upon a critical situation and there is part of the balance to support you. Those funds are for retirement, but can also be useful in an emergency,” said Bernardo González.


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