The Pension Fund for Wellbeing will have a cost of 130 billion pesos for the next 10 years, revealed Gabriel Yorio, Undersecretary of the Treasury, this Tuesday.
This fund will seek to guarantee a pension of 100 percent of salary for people who contribute low Law 97 of the Mexican Social Security Institute (IMSS).
The Undersecretary of the Treasury explained that President López Obrador asked them to try prefund nearly 60 billion pesos.
“The mix with which the first 60 billion pesos will be funded will have to do with the sale of some assets in the federal governmentand some budget savings in some budget lines that we are still identifying,” he explained.
In his ‘morning’ this Tuesday, López Obrador announced that he will sign the decree for the creation of the Pension Fund for Wellbeing on May 1, Labor Day.
“I would very much like the law to be approved and to see if we can create the Fund for the first of May as a demand for the workers of Mexico,” he said on April 19.
Welfare Pension Fund: What will happen to inactive Afores accounts?
“Obviously an important part involves temporarily using the liquidity of inactive accounts that are in the Afores, inactive accounts that are more than 10 years oldthis is provided for in the Law, the spirit of this reform It has never been about taking workers’ assets and that is not what we are going to look for,” Yorio emphasized.
The Undersecretary of the Treasury explained that in the event that a beneficiary of an inactive Afore account claims the resources, the federal government is obliged to reimburse that money even if 10 years have passed, and added that the mechanism to resolve these differences will be presented soon.
“The budget analysis of How will this compensation scheme be funded? We are practically going to present it when we make the secondary regulations, he said.
According to Yorio, on average workers’ inactive Afores accounts have little money, between 200 and 300 pesos.
“We still have to define with the Afores What would the processes be like to pull that liquidity into the ‘seed fund’? and also to make clear the way in which it will be compensated when there is a claim. It is not like we are going to take them away, rather we have to find the transfer mechanisms and come to an agreement with the union,” he stressed.
How many weeks of contributions do you need to be a beneficiary of the Pension Fund for Wellbeing?
Gabriel Yorio added that the Pension Fund for Welfare will focus on people who have more than a thousand weeks of contributionswho are the ones who will be able to access the compensation system.
The compensation will be capped at 16,600 pesosor those below will be guaranteed 100 percent of the replacement rate.
“The cost will be 130 billion over the next 10 years and that is a bit of the actuarial projection that we are observing, What we would like is to pre-fund by half and the other half, what will happen is that during the next 10 years compensations will be made,” he added.
According to the Undersecretary of the Treasury, the compensations made are not linear and will grow towards 2030. He estimated that most of the people who are under Law 97 will begin to collect their pension. from 2026 and 2027.
Yorio admitted that it is still unknown if this reform will be applied retroactively to those who already retired under Law 97 with a low payment.
