Mexican lawmakers approve new pension fund backed by president

By Thomson Reuters Apr 25, 2024 | 10:26 PM

MEXICO CITY (Reuters) – Mexico’s Senate approved the creation of a new pension fund on Thursday aimed at boosting payouts to the lowest-earning recipients.

The creation of the fund, which is part of a pension reform proposed by outgoing President Andres Manuel Lopez Obrador, won the support of 70 senators, with 43 against and two abstentions, after a heated debate that went into the evening.

The reform aims to ensure that pensioners receive 100% of their last monthly salary up to about 16,777 Mexican pesos ($975), which is the average monthly wage for workers affiliated with Mexico’s social security institute.

After passing in the Senate, which followed approval by the Lower House of Congress earlier this week, the bill will now go to Lopez Obrador to sign into law.

“Today we fight so that workers can retire with 100% of their salary, so that the workers of this country can enjoy a retirement that gives them dignity and justice,” Senator Geovanna Banuelos said in a speech supporting the reform.

The fund will be initially funded by some 40 billion Mexican pesos ($2.32 billion) in unclaimed savings held by workers over 70 years of age in inactive accounts with private fund administrators, known as “afores.”

Critics have warned this could jeopardize the savings of some Mexicans managed by afores, which at the end of March managed more than 6.1 trillion Mexican pesos, a claim denied by the government.

Mexico’s association of retirement fund entities has said that individuals continued to have control over their accounts and that would not change with the new initiative.

“They want to steal your money,” Xochitl Galvez, the leading opposition candidate in Mexico’s June presidential election, said on Thursday.

“What (ruling party) Morena really wants to do is use Mexicans’ savings to send to a public fund and use it how they wish,” Galvez said.

($1 = 17.2091 Mexican pesos)

(Reporting by Brendan O’Boyle; Editing by Anthony Esposito)