MEXICO CITY (AP) — Mexico’s president proposed changes to the country’s individual-account pension program Wednesday, suggesting that employer contributions should more than double and private pension administrators should lower their commissions.
President Andrés Manuel López Obrador said he wants to overhaul a system created in the 1990s under which workers usually wind up with too little money in their retirement accounts to give them a decent pension. Only about a third of workers retire with enough time employed to qualify for a pension, and average monthly pension payouts are only equivalent to about 30% of their last paycheck.
López Obrador proposed reducing the time worked to qualify from 25 years to 15, after which it would gradually move upward again. That would help about 82% of workers to qualify. His plan resisted calls to raise the minimum retirement age from 60 to 65.
The proposal aims to focus government contributions to the lowest-paid workers, in order to increase their pensions to about 54% of their last paycheck. After age 68, Mexicans also qualify for a smaller fixed, supplementary payment often used to buy groceries.
Under the proposed overhaul, over the course of eight years employers' contributions would rise from 5.15% to 13.87% of a workers'salary, or about 2.7 times more.
The banks and fund administrators that handle workers' accounts would have to pledge to reduce commissions to around the annual international average for pension funds of about 0.7% per year.
The changes must still be submitted to and approved by both houses of congress.