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Mexican president aims for ambitious pension reform

In World
January 10, 2024

MEXICO CITY – Mexico’s president on Tuesday unveiled a new reform proposal which would ensure pensioners earn in retirement what they made as workers, a constitutional change considered a long-shot as his party lacks the votes in Congress to guarantee its passage.

President Andres Manuel Lopez Obrador’s Morena party and its allies previously passed one of the biggest overhauls to the country’s pension system in years in 2020, boosting retirement benefits and reducing workers’ mandatory contribution times.

“We achieved a reform, but it is not complete. That is why we are now going to deepen it,” said Lopez Obrador, who on Sunday announced his intention to propose the initiative before he leaves office in October.

Since 1997, control of Mexico’s pension system has been in the hands of private fund administrators, known as “afores,” which as of October managed some 5.4 trillion pesos ($320 billion) – roughly 20% of Mexico’s gross domestic product – according to data from pension system regulator Consar.

“What I want is for whoever retires to receive a decent pension – the same thing he receives when he decides to retire,” Lopez Obrador added, without explaining how to make that happen.

Amafore, an association representing Mexico’s afores, including Citibanamex Afore, Afore SURA and Afore XXI Banorte, declined to comment.

The reform’s odds of becoming law are low, the consultancy Eurasia Group said Monday in an analysis note.

“Such a proposal would be very disruptive and is unlikely to be approved in Congress,” the consultancy said.

Lopez Obrador said the issue will be high on the agenda of whoever succeeds him after the June 2 presidential election, in which Morena’s candidate, Claudia Sheinbaum, holds a clear advantage in polls.

The president has said that before finishing his term he will also present a reform to raise the minimum wage every year above inflation as well as a reform of the judicial power – both of which Morena and its allies lack the votes to ensure. REUTERS

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