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Center Publication

Mexico—Public Policy

by Laura Ruiz Pérez and Ricardo Massa Roldán

January 2011—By 2050, older adults will constitute nearly half of the Mexico's population. The growth of this age cohort highlights the need for for Mexico to develop an efficient, well-structured pension system to ensure economic independence for the population, according to a new study by the Sloan Center on Aging & Work.

Projections indicate that younger employees, currently representing 46.9% of Mexico's Economically Active Population (EAP), will reduce their participation to 34.7% in 2030 and 29.4% in 2050. At the same time, older employees will increase their participation from 19.5% to 31.5% and 40.7% for the same periods. Likewise, women will increase their participation from 35.5% (2009) of the EAP to 39.6% and 42.1%. These projections suggest attention must be given to the creation of programs that lead to an inclusive workplace for women and older employees, as well as to the country's pension system.

Mexico's defined-contribution pension plan represents 75.7% of the pension package for employees, the highest of the reported OECD countries for that type of provision. Specifics on Mexico's pension plan include:

  • Employees, employers, and the federal government combine to contribute 6.5% of an employee's earnings into a pension fund;
  • The National Institute of Workers' Housing Fund makes an additional contribution of 5% to an individual housing fund;
  • Withdrawals can be made on an individuals retirement account, for example if unemployed for at least 46 days;
  • Currently, workers who have been in the pension system for only 3 years can withdraw up to 58% of their pension if unemployed;
  • If an account is depleted by retirement, the government will provide a pension equivalent to the minimum wage. 

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