In the early hours of April 26, the Upper House of Mexico approved a controversial reform to the retirement system promoted by the Government of Andrés Manuel López Obrador, with just over a month left for the presidential elections. The reform contemplates the creation of the Pension Fund for Wellbeing, an initiative that seeks to raise funds from the retirement accounts of those over 70 years of age that have not been claimed. López Obrador says that the fund will begin operating on July 1.
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The future of Mexican pensions is debated weeks before the presidential elections. With 70 votes in favor, 43 against and two abstentions, the controversial Pension Fund for Wellbeing was approved within the Mexican Senate, which now delegates final responsibility to the Executive, which only has to sign the initiative for it to be enacted as law .
In his daily conference, López Obrador welcomed the approval of the Senate this Friday, April 26, predicting that it will be next May 1 when his Government will define the practical procedures with which the fund will operate, which the president hopes will begin to be implemented. operate no later than July 1, one day before the elections.
“The trust will be created, it will be financed so that it has resources and that by July 1st the first compensation can be delivered to the first worker and from there, it will move forward,” stated the Mexican president hours later. of the approval of the pension reform.
This morning the president @lopezobrador_ announced that on May 1 he will present the operation of the Welfare Pension Fund and announced that on July 1 a worker will be receiving his first compensation.
From now on, the Mexican workers who earn… pic.twitter.com/fI0gCNWxDH
— Government (@SEGOB_mx) April 26, 2024
Criticized by the opposition and praised by the ruling party, the Pension Fund for Wellbeing aims to raise public funds to complete the retirement accounts of older adults who have a pension lower than the average salary of employees affiliated with the Mexican Social Security Institute ( IMSS), with annual updates based on inflation.
Read alsoThe president of Mexico proposes a reform to increase pensions
What is the Pension Fund for Wellbeing about?
Born from the bench of the ruling Morena party (left) in the Mexican chamber, the Pension Fund for Wellbeing proposes the reform of the Social Security Law, the Law of the Retirement Savings System, the Law of the National Fund Institute of Housing for Workers and the Law of the Institute of Security and Social Services of State Workers.
The ambitious fund aims to guarantee access to a decent pension for adults over 65 years of age who began contributing to Social Security after 1997, when current pension legislation came into force. The bill is part of the ambitious reform package proposed by López Obrador last February.
The proposal seeks to grant a pension equal to 100% of the pensioner's last monthly salary, with a cap on the average salary registered in the IMSS, which is just over $987.
The controversy of the reform comes from the way that the ruling party's initiative aims to raise funds to complete retirements less than that amount.
Since 1997, Mexican pensions have been run by a private administration system, known as 'Afore'. López Obrador has shown his disagreement with the current pension scheme, which he has described as “a great injustice.”
For this reason, the reform aims to force the Afores system to transfer just over 2,000 million dollars to the Pension Fund for Wellbeing, money from the retirement accounts of workers aged 70 or older that have not been claimed.
In addition, the initiative also includes funds from the Institute to Return Looted to the People, settlements of tax debts, and profits from state infrastructure projects, such as the Felipe Ángeles International Airport and the Mayan Train.
According to official datain 2023 there were just over 16 million adults over 60 years of age within Mexican territory.
Morena seeks to “handle and loot workers' savings”: Xóchitl Gálvez
The Mexican opposition does not welcome the approval of the ambitious reform. In a press conference on April 25, the candidate of the Fuerza y Corazón por México coalition for the Presidency, Xóchitl Gálvez, criticized the implementation of the new pension fund.
“It is unacceptable that Morena seeks to manipulate and loot the savings of workers who for years and with so much effort have managed to save a little of their entire professional life,” mentioned the conservative candidate, who accused the Morena Government of wanting to “steal all their savings to Mexican families.
For his part, Ignacio Mier, a senator from the ruling party that brought the initiative to the plenary session of the Upper House, defended his party's reform project, adding that “what the fund intends to be is a solidarity compensation fund, which “It does not affect any rights, nor does it rob anyone.”
On the eve of the Mexican general elections, Andrés Manuel López Obrador seeks to complete his last mega-reform before leaving office in December, although this does not convince all sectors of society.
With EFE, Reuters and local media.
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