What is the Welfare Pension Fund?

The Chamber of Deputies approved, in general and in particular the non-reserved articles, the opinion that reforms, adds and repeals various secondary provisions for the creation of the Welfare Pension Fund.

According to official information, its purpose is to receive, manage, invest and deliver the resources provided to it; it will be established by the Ministry of Finance and Public Credit as a public trust not considered a parastatal entity, in which the Bank of Mexico will act as trustee.

Retirement Fund Administrators (AFORES), institutions that perform similar functions of a public nature, as well as service provider administrators, must transfer the resources from the Retirement, Severance Pay at Advanced Age and Old Age Subaccounts, when the workers reach 70 years of age, without the need for a court ruling, to the Welfare Pension Fund, and must notify the Mexican Social Security Institute of each transfer on the same day it is made. This will not apply to the resources of workers who have an active employment relationship with the Institute.

It stipulates that if the worker turns 70 years old without him or his beneficiaries having exercised their right to receive the funds from the Housing Subaccount, Infonavit must transfer said funds to the Welfare Pension Fund. This will not apply to active workers.

In the case of state workers, Pensionissste or the administrators, as well as the administrators providing services, must transfer said resources, when the workers reach 75 years of age, without the need for a judicial resolution, to the Pension Fund for Welfare. This will not apply to the resources of workers who have an active employment relationship with ISSSTE.

The document reforms and adds to the laws of Social Security, the National Workers’ Housing Fund Institute, the Institute of Social Security and Services for State Workers, the Retirement Savings Systems, the Federal Budget and Fiscal Responsibility System, the Federal System for the Administration and Alienation of Public Sector Assets, and the decree by which the Decentralized Public Body called the National Agricultural, Rural, Forestry and Fisheries Development Finance Agency is extinguished, and repeals its Organic Law, published in the Official Gazette of the Federation on May 29, 2023.

FOR RETIREMENT

The document, approved by a majority in the legislative body on April 18, reforms various regulations to create the Pension Fund for Welfare and its objective is that workers who have been affected by the system of individual accounts managed by the Afores can retire with 100 percent of their average contribution salary, up to a maximum amount of the average monthly salary registered with the IMSS.

It is recognized that IMSS workers who began working in 1997, after the reform that created the individual account system, as well as workers in the State Service who are under the individual account system, have been affected at the time of their retirement, since this system covers at most 45 percent of their salary, which causes impoverishment at a stage of life in which there are many needs as a consequence of old age.

The Welfare Pension Fund is conceived as a solidarity fund that complements the pension amount offered by the Afores and is proposed to be established as a public trust, with the Bank of Mexico as trustee.

The sources of income considered for the creation of the Pension Fund are diverse, highlighting, among them, 75 percent of the income obtained by the Institute to Return to the People what was Stolen, the recovery of debts that entities have with federal social security institutions with which they have signed agreements for the granting of various benefits, the resources of the inactive sub-accounts for retirement due to unemployment at advanced age and old age managed by the Afores and that since 2020 it was legislated that they should be entered into the IMSS and ISSSTE, as well as the returns on the investments made.

With regard to the resources of inactive accounts, it is guaranteed that there will no longer be any failure by the Afores to deliver them to social security institutions, as has happened until now, and the imprescriptibility of the right of workers, as well as their beneficiaries, to claim the funds at any time, including the interest generated, is guaranteed.

The ruling establishes precisely, both in the Social Security Law and in the Law of the National Housing Fund for Workers and in the ISSSTE Law, that the resources of the individual accounts of those workers who have an active employment relationship will not be applicable to the Pension Fund.

Additions to the Retirement Savings Systems Law are proposed to strengthen the right of workers to information regarding the level of savings that must be reflected in the account statements issued by the Afores, as well as regarding the resources that are transferred to the Pension Fund.

The decree does not reform the system of individual accounts managed by the Afores, but it does seek to benefit those who have their savings in these accounts, complementing the amount of the pensions they offer.