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FACTBOX-Changes under Mexico’s planned pension reform

Mexican workers will see a major boost to their retirement benefits after the government and private sector ironed out the details of a pension reform that lawmakers are expected to pass into law by early 2021. Following are key changes and aspects of the planned reform according to the Mexican finance ministry: - Retirement benefits for the average worker are forecast to increase by 40%. - Under the plan, total contributions will rise from 6.5% to 15% of salary over eight years, and employer contributions will rise from 5.15% to 13.87%. - Once in effect, workers that meet the requirements of 750 weeks worked and 60 years of age will immediately be guaranteed a pension. Now Mexicans need to work at least 1,250 weeks to be eligible for a pension. - Some 20 million Mexicans will be impacted by the reform. - The plan also reforms the investment regime for Mexican pension funds, also known as Afores, in order to diversify risk and allow for investments in infrastructure projects. - The reform includes a clause to review the pension system’s performance every 10 years and recommend needed changes. - Included is an initial two-year grace period wherein employer contributions will not increase to give firms some breathing room considering the economic fallout of the coronavirus pandemic. - Further negotiations with pension funds will be needed so they voluntarily reduce their commissions in line with international levels. Afores, managed some 4.3 trillion pesos ($192.60 billion) in savings at the end of June. - The finance ministry also wants to make it easier to make withdrawals from voluntary worker savings. Currently, withdrawals are allowed only once every six months. (Reporting by Anthony Esposito; Editing by Cynthia Osterman) Our Standards:The Thomson Reuters Trust Principles.0 : 0narrow-browser-and-phonemedium-browser-and-portrait-tabletlandscape-tabletmedium-wide-browserwide-browser-and-largermedium-browser-and-landscape-tabletmedium-wide-browser-and-largerabove-phoneportrait-tablet-and-aboveabove-portrait-tabletlandscape-tablet-and-abovelandscape-tablet-and-medium-wide-browserportrait-tablet-and-belowlandscape-tablet-and-belowAppsNewslettersAdvertise with UsAdvertising GuidelinesCookiesTerms of UsePrivacyDo Not Sell My Personal InformationAll quotes delayed a minimum of 15 minutes. See here for a complete list of exchanges and delays. © 2020 Reuters. 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