The assets managed by the Retirement Fund Administrators (AFORES) of Mexico amounted to 5 trillion 246,100 million pesos at the end of 2021.
An AFORE is an institution that is in charge of carrying out the administration of funds for the retirement of workers.
According to preliminary figures from the Mexican government, as of December 31 of last year, 70.4 million individual retirement accounts had been established and managed by the AFORES.
The AFORES may invest up to 100% of the funds they manage in government debt securities or in debt securities issued by private sector companies, depending on the credit rating of the issuer, and up to 20% in foreign securities with specific limits on the credit rating of debt securities.
AFORES can also invest in equity securities issued by Mexican entities.
In general, the Mexican retirement savings system is designed both to improve the economic condition of Mexican workers and to promote long-term savings in the economy, providing financing for investment projects in both the public and private sectors.
The independent retirement accounts of each worker are managed by the AFORES. These private sector entities are established, subject to government approval, to manage individual pension accounts and mutual funds known as Sociedades de Inversión Especializadas de Fondos para el Retiro (SIEFORES).
Although investments in AFORES by foreign financial institutions are permitted, Mexican persons must own the majority of the outstanding shares of each AFORE entity. No single person may acquire control of more than 10% of any class of shares.
On the other hand, the National Retirement Savings System Commission (CONSAR) has established general provisions for the investment regime applicable to investment companies specializing in retirement funds.
These provisions include a list of countries eligible for such investments, considering the security and development of their markets.
On August 22, 2019, the CONSAR governing board agreed to increase workers’ pensions and help workers maximize their retirement savings by gradually reducing commissions to internationally competitive levels, with reference to standards through benchmarking activities.