The Andres Manuel Lopez Obrador (AMLO) administration's proposal would increase the total amount of contributions from 6.5 percent to 15 percent without increasing the workers' quota. This will occur because the employers' contribution would increase from 5.15 percent to 13.87 percent.
"Over an eight-year period, employers will increase by 2.7 times what they contribute to the retirement of their workers. The contribution made by the Mexican state will not change," Herrera added.
While the proportion of retirees receiving a pension would increase from 34 percent to 82 percent, the proportion of workers entitled to a pension would increase from 56 percent to 97 percent, the Finance Secretary holds.
He also pointed out that the mandatory time to be entitled to a pension would decrease from 1,250 weeks (25 years) to 750 weeks (15 years).
This will be the first pension system reform since 1997 when the Mexican government created the Retirement Fund Administrators (Afore), which is a private system in which workers, employers and the government contribute to retirement.
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With this system, only 1 out of 4 older adults receives a contributory retirement. The International Labor Organization (ILO) estimates that 80,000 Mexicans will reach retirement age in 2022; 7 out of 10 of them, however, will not have accumulated the 1,250 weeks required.
"In Mexico, a retiring worker only receives 30 percent of his salary," said the Confederation of Mexican Workers (CTM) Secretary Carlos Aceves, who is also a federal senator.
“The reform is not enough, but it is what can be done right now. Besides the fact that we are going through a pandemic, the timing is not very appropriate," he added.
"If that reform is not corrected, workers will receive less than half their wages upon retirement. This would continue to worsen over time," President AMLO said and urged Congress to pass the bill.