Post by account_disabled on Mar 5, 2024 10:33:21 GMT
The Organization for Economic Cooperation and Development warned that if the reforms made to the pension system in Mexico are not implemented, they could lead to strong fiscal pressure in the mid-. The organization carried out a study to evaluate the Mexican pension system and its need for long-term functionality, since the increase in the number of retirees by the year represents a risk for the State's financial instruments. According to the National Population Council for that year, there will be close to million older adults. While, according to figures, in there will be five workers for every retiree. The multilateral organization noted that to guarantee an income level of more than half of the last salary, a worker needs to make a mandatory contribution of between percent, instead of the current 6 percent. Other points that the organization pointed out that can be improved to have a better pension are the transitional process from the old system to the new, the social protection system for old age and the fragmentation of the system. In Mexico, the mandatory contribution of private sector workers is the lowest of all members; for example, Korea has 8 percent, while Hungary has 35 percent.
Until the mid-, Mexico had a traditional pay-as-you-go defined benefit pension system that was administered by the Government. However, this America Mobile Number List plan has undergone several changes since then, and currently, the country is one of the few OECD countries that has reformed its mandatory pension system to transition to the defined contribution (DC) system – which accumulates in a personal account. “These reforms were aimed at mitigating the growing public pension obligations of the DB system, given the high pension promises and low contribution rates” by workers, since “employees in Mexico do not contribute much of the rate.” of total distribution.” The social contribution contributed by the State is greater than that contributed by the worker, which will not be sustainable in the long term, according to the study. He points out that increasing the worker's contribution would help cushion the government share. However, this would reduce their net income, which in some cases is already low.
Given this situation, the OECD proposes that these increases be linked to salary increases. That is, the contribution would increase only if the worker's salary increased, so it would not affect his or her disposable income. The main problem facing the Mexican pension system comes not from the defined contribution individual account system itself, but from the transitional process established to move from the old pay-as-you-go and defined benefit system to the new system, the agency considers. This transition process allows employees, called “transition generation” – employees whose retirement situation is transitioning between the old system and the new – to choose between retiring with the benefits of the BD formula or the benefits of the formula. (CD). And because the pension benefits offered by the CD system are reduced compared to the BD, fewer and fewer workers want to choose this retirement option. Due to the above, the OECD anticipates a drop in pension benefits “once the transition period from the old DB system to the new CD system has concluded, it may generate discouragement and opposition to the new CD pension system in the population.
Until the mid-, Mexico had a traditional pay-as-you-go defined benefit pension system that was administered by the Government. However, this America Mobile Number List plan has undergone several changes since then, and currently, the country is one of the few OECD countries that has reformed its mandatory pension system to transition to the defined contribution (DC) system – which accumulates in a personal account. “These reforms were aimed at mitigating the growing public pension obligations of the DB system, given the high pension promises and low contribution rates” by workers, since “employees in Mexico do not contribute much of the rate.” of total distribution.” The social contribution contributed by the State is greater than that contributed by the worker, which will not be sustainable in the long term, according to the study. He points out that increasing the worker's contribution would help cushion the government share. However, this would reduce their net income, which in some cases is already low.
Given this situation, the OECD proposes that these increases be linked to salary increases. That is, the contribution would increase only if the worker's salary increased, so it would not affect his or her disposable income. The main problem facing the Mexican pension system comes not from the defined contribution individual account system itself, but from the transitional process established to move from the old pay-as-you-go and defined benefit system to the new system, the agency considers. This transition process allows employees, called “transition generation” – employees whose retirement situation is transitioning between the old system and the new – to choose between retiring with the benefits of the BD formula or the benefits of the formula. (CD). And because the pension benefits offered by the CD system are reduced compared to the BD, fewer and fewer workers want to choose this retirement option. Due to the above, the OECD anticipates a drop in pension benefits “once the transition period from the old DB system to the new CD system has concluded, it may generate discouragement and opposition to the new CD pension system in the population.