Thanks to a private pension system borrowed from the Chilean dictatorship, Mexican workers currently receive less than 30 percent of their salary when they retire.
The Chilean president-elect Gabriel Boric's proposal on the need to dismantle the private pension system found an echo in Mexico, a country whose citizens also suffer the consequences of individual capitalization of social security contributions.
The National Autonomous University of Mexico (UNAM) Researcher Gustavo Leal explained that his country's Retirement Fund Administrators (AFORE) are very similar to the Pension Fund Administrators (AFP) created by the Chilean dictador Augusto Pinochet (1973- 1990).
"During President Ernesto Zedillo's administration (1994-2000), Mexican technocrats made an almost perfect copy of Pinochet's privatization of the pension system," Leal recalled.
For this reason, Mexican workers currently receive less than 30 percent of their salary when they retire. This figure is below the average of the Organization for Economic Cooperation and Development (OECD), an institution which includes Chile, Brazil, Mexico, and Argentina.
����In #Chile with water cannons and teargas, the police repressed protesters, demanding the resignation of right-wing President Sebastian Piñera and asking for a withdrawal of their pensions held on a neoliberal private system. pic.twitter.com/1zwNs0YjrZ— ©halecos Amarillosᴳᴸᴼᴮᴬᴸ ��ʷAͤNͣOͬNͤYˡMͤOᵍUͥSͦⁿ (@ChalecosAmarill) November 25, 2020
In January 2021, however, the first reform carried out since 1997 to the Mexican Retirement Savings System (SAR) came into effect to increase the squalid income of retirees by 40 percent, expand coverage of "guaranteed pensions" from 34 percent to 82 percent, and raise the number of Mexicans entitled to a pension from 56 percent to 97 percent.
To do this, the SAR reform reduces the security contribution requirement from 25 years to 15 years. However, it increases the monthly contribution to the pension system from 6.5 percent to 15 percent.
"The reform is insufficient because it preserves the model that Boric wants to replace, that is, the individually-funded system that completely breaks solidarity," professor Leal stressed, adding that the Mexican private pension system could still remain in place until at least 2032 due to collusion between corporations and some union leaders.