What is the UMA and how does it affect pension amounts?

In Mexico, the Unit of Measurement and Update (UMA) is a economic benchmark established in Mexican pesos which is used to determine the amount to be paid in various obligations and regulatory assumptions at both the federal and state level. One of the aspects is related to pensions, which have been affected by the changes and the appearance of the UMA.

The Unit of Measurement and Update (UMA) was introduced in 2016 following a constitutional reform in Mexico, designed for deindex the minimum wage and avoid the proportional increase in tax obligations with each increase in the same.

Initially, the value of the UMA was equivalent to that of the minimum wage, however, With annual updates it has begun to differentiate itself.

Every year, the National Institute of Statistics and Geography (INEGI) is responsible for updating the value of the UMA, which is published in the Official Journal of the Federation in early January and comes into effect on 1 February.

How is UMA calculated?

He Calculation of the daily value of the UMA It is done by multiplying the value of the previous year by the result of 1 plus the year-over-year percentage growth of the National Consumer Price Index December.

To obtain the monthly value, multiply the daily value by 30.4 and the annual value by multiplying the monthly value by 12.

What is UMA used for?

The importance of UMA In Mexico, it is based on its use to calculate amounts in various areas, including the payment of fines, mortgage loans, taxes, government procedures and benefits.

If you had an Infonavit loan more than 10 years agoyou will remember that every beginning of the year the new minimum wage came into effect, Your home debt was increasingbecause the credit was established based on the minimum wage (Times Minimum Wage).

Impact of UMAs on pensioners

With the reform of the Political Constitution of the United Mexican States, Any reference to the minimum wage in federal and state laws should be interpreted as referring to the UMA.

This applies in the Determination and payment of contributions, limits, exemptions and payments of feesas well as in the laws of the Income Tax, Social Security Tax (such as pensions) and the Infonavit, inter alia.

According to analysis by legislators from previous years, The calculation of pensions based on the UMA causes workers to lose a high percentage of their pensions (around 30 percent), which affects the purchasing power of workers in their retirement stage.

Once a person retires, The annual update is based on inflation which is determined for that year. This is also a factor that is causing it to lag behind in terms of the amounts received by new retirees.

The introduction of the UMA has been a major change in the Mexico’s economic and legal structureproviding a tool that helps economic stability while adjusted annually to reflect inflation and other economic indicators. However, the affected party, as we have seen, has been the retirees.

Journalist with more than 15 years of experience in print and digital publications. I am currently the editor of Debate.com.mx. I have a degree in Communication Sciences. I have covered diverse news sources, especially in the business areas. I usually write about personal finances, retirement, pensions, IMSS, employment, money, currencies, credits, entrepreneurship, insurance, technology, science and scientific studies in areas such as health. I like social media, reading about marketing, SEO and literature, especially politics and history. In 2018 I started mibolsillo.com and since then I have ventured into digital journalism.

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