Mexico occupies one of the worst places in the world in relation to pensions: the elderly receive less than a third of the income of a “typical” worker!
A pension of less than 30% of their salary, for a 65 years old person who has worked and contributed to social security for 40 years, is clearly inadequate, unfair and unacceptable.
At the same time, there are privileged groups that receive and will continue to Received pensions close to or greater than 100% of their salary from 55 or 60 years old, having worked 30 years or less.
We can give the example of two individuals with a similar career, with the only difference being that they started working on 2 different dates: one in June 1997 and another in August of the same year; the first will receive a pension two or three times greater than the second.
The above statements are without considering, that more than half of the working population does not contribute periodically to obtain a pension, which means that at least 2/3 of those who work today will not be entitled to a pension properly, but to a meager subsidy from the government: between ½ and one minimum wage.
We have been diagnosing the problem for 20 years, but without acting decisively.
So what we will have achieved is to become a country of poor old people, with huge and regrettable consequences for the economy and society.
All of this is not just an economic and social security problem, but a national security issue. We just have to observe what has happened in Chile, Nicaragua, Argentina, etc. …
Both the government, employers and individuals have mechanisms to have better pensions and we have made all the possible attempts to save … But it’s not in our genes!
On the one hand, the government does not dare to increase mandatory contributions or to exercise its authority in order to formalize the labor market; on the other hand, it is the last concern of companies to provide a supplementary pension to their workers. -There are 2 million of companies in Mexico and less than 2,000 corporate pension plans-.
And finally, no one gets up thinking “I’m going to deposit my 10 pesos a day”, as suggested by the CONSAR in its communication campaign to promote savings.
And nobody gets up thinking about going to the “Seven” to deposit their “ten little pesos”
It is not the time for any diagnosis; … it’s time to act! And do not look for the black thread, there is enough international experience that can guide us to do it correctly:
- Establish a Universal Appropriate Pension: 1.5 minimum wages for all citizens
over 65 years of age.
- Include in the mandatory Social Security scheme all employers and workers in
family industries, domestic workers and those who provide their service
independently (“for fees”). Gradually increase the contributions of companies and
workers to social security or corporate schemes.
- Return the deductibility of the contributions to Private Pension Plans at 100%.
- Incorporate the contributions that are currently made to Infonavit, to the pension
- Homogenize the different pension systems and cancel privilege regimes.
- Soften the period of transition between the generation ’70 and ’97 (not
diminishing benefits of the former but increasing those of the latter).
- Establish effective mechanisms -including the exercise of authority- to diminish
labor informality -including permanent staff who work “for fees” – both in private
initiative and in public administration.
- Facilitate and promote alternative schemes, such as savings through
- Make savings easier and more accessible through Personal Retirement Plans,
both for individuals and for the institutions that offer them.
So that’s what you have to do for your homework …