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30 October, 2023

FIAP calls for the design of an inclusive and financially sustainable public pension policy

The latest Amafore (Mexican Association of Pension Fund Managers) and FIAP Assembly was held this week, bringing together leading academics and experts from different countries to discuss the multiple options for investing workers’ savings throughout their working lives, with a focus on retirement planning.

This Seminar also coincided with the 26th anniversary of the launching of the individual savings system in Mexico, which currently has US$293 billion in assets under management, representing 18% of GDP. In this context, FIAP’s Board of Directors highlighted the development of the Mexican pension system and the implementation of the pension reform that “gradually increased contributions to individual accounts from 6.5% to 15%, positioning the country as a leader in these matters in the region and a positive example to follow.”

Due to global demographic changes, countries that have included individual savings as part of their pension system grew from 17 to 51 between 1999 and 2022. Furthermore, one in six people will be over the age of 65 by 2050. Hence, the international agency stated that “this requires us to be very careful in the design of an inclusive and financially sustainable public pension policy”.

FIAP also highlighted the “urgent need to incorporate new sources of financing, strengthen voluntary savings plans, and establish other retirement savings modalities that complement existing ones,” considering the high levels of labor informality in Latin America, which exceed 140 million workers who currently generate income independently and informally. “It is important to bear in mind that access to a pension is a universal right,” it stressed.

The agency expressed its commitment to working together with different stakeholders in the public and private sectors to develop policies at a national level in accordance with the needs of each country, promoting pensions that avoid poverty in old age while providing an adequate standard of living. “For FIAP, members must be at the center of the discussion and be granted pensions that give them peace of mind after all their years of hard work,” it added.

Finally, the Board of Directors declared the “need for Latin American countries to establish or promote a well-designed non-contributory pillar that protects the elderly from poverty and does not discourage contributions to contributory programs,” considering “the rampant labor informality in the region, with an average of 44% of the employment, as well as the new work modalities in the labor market,” it concluded.



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