Yesterday, President Andrés Manuel López Obrador presented a proposal to overhaul Mexico’s pension system in a bid to increase the payments workers will receive once they retire. The reform will benefit low-income workers.

The pension reform will increase pensions by 40% and will reduce the working years required to be eligible for a pension.

If the overhaul is approved, authorities estimate that around 20 million workers will benefit from it and as President López Obrador said, if the government doesn’t the Mexican pension system, workers will only receive half of their salary when they retire, an unfair situation that could even worsen in time, especially amid the unstable economic overview.


The pension and labor sectors welcomed the reform. Firstly, the Mexican Association of Afore Institutions (Amafore) said the proposal will correct the deficiencies present in the pension system, 23 years after its creation. It added that the overhaul allows workers to maintain their lifestyle once they retire and that Afores will have more resources to invest in infrastructure projects required by the country.

On the other hand, business chambers and the private sector praised the reform and said they hope that the increase in employer contributions to pension funds won’t undermine formal employment, although they raised the possibility of some companies registering their employees with lower salaries before authorities, especially since the employer fees won’t increase if the workers make the minimum wage. Therefore, the private sector said it will make sure companies do not use fraudulent practices.

It is positive all parties reached an agreement despite the polarization between the federal government and the private sector, as consensus must the path to solve important issues. The complexity of the pension system will not end with the reform and it will require evaluations and adjustments. This is only the first step.


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