Reform for the Creation of the Welfare Pension Fund

By Tania Ávila

The main objective of the initiative approved by the Congress of the Union is to supplement the pensions of workers whose retirements are equal to or less than the average monthly salary of workers registered with the Mexican Social Security Institute, utilizing resources transferred from inactive accounts of the Retirement Fund Administrators (“AFORES”).

The Welfare Pension Funds will be managed by the Ministry of Finance and Public Credit in conjunction with the Bank of Mexico as trustee.

Resources from the Retirement, Unemployment at Advanced Age, and Old Age Subaccounts will also be managed for workers who reach 70 years old without the need for a judicial resolution, unless they maintain an active employment relationship. Similarly, if a worker or their beneficiaries have not claimed the resources from the Housing Subaccount by the age of 70, INFONAVIT will transfer them to the Pension Fund, except for those who are still actively employed.

On the other hand, regarding state workers, the process will be slightly different. Upon reaching 75 years old, the resources must be transferred by PENSIONISSSTE and other service administrators to the Welfare Pension Fund unless the worker remains active in their employment relationship with ISSSTE. This structure ensures that the resources intended for retirement are managed effectively and benefit those who need them most at the end of their working life.

It is expected that the president will sign the decree to officially establish the fund on May 1st, coinciding with Labor Day.

Labor and Social Security Area of ECIJA Mexico

socios.mexico@ecija.com

(+52 55) 56 62 68 40

www.ecija.com