The Mexican retirement savings system
The retirement savings system in Mexico is designed both to improve the economic condition of Mexican workers and to promote long-term savings in the economy by providing financing for investment projects in both the public and private sectors.
The independent retirement accounts of each worker are managed by the Administradoras de Fondos para el Retiro (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 a majority of the outstanding shares of each Afores entity.
No person may acquire control of more than 10% of any class of shares.
Retirement savings system
Afores may invest up to 100% of the resources they manage in public debt securities or 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 the debt securities.
Afores may also invest in equity securities issued by Mexican entities.
According to preliminary figures, as of December 31, 2022, 72.0 million individual retirement accounts have been established and managed by Afores.
At the end of 2022, assets managed by the Afores amounted to 5,224.3 billion pesos.
The National Commission of the Retirement Savings System (CONSAR) has established general provisions for the investment regime applicable to investment companies specializing in retirement funds.
Those provisions include a list of eligible countries for this type of investments, considering the security and development of their markets.
On August 22, 2019, CONSAR’s Board of Governors agreed to increase workers’ pensions and help workers maximize their retirement savings by gradually reducing fees to internationally competitive levels, with reference to international standards through benchmarking activities.
