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FIAP > Boletín – Recientes > Pensions Note No. 35 – Mexico: Proposed Changes to the Pension Savings System Law – April 2019

Pensions Note No. 35 – Mexico: Proposed Changes to the Pension Savings System Law – April 2019

17 July, 2019

On January 23, the Executive Branch submitted a bill of law through the Ministry of Finance that amends several articles of the Pension Savings System Law (LSAR).

 

through the Ministry of Finance, presented an initiative to modify various articles of the Retirement Savings System Law (LSAR). The most relevant changes are as follows:

  1. Transformation of the “Specialized Pension Fund Investment Companies” (SIEFORES) into “Investment Funds Specializing in Pension Funds;”
  2. Greater flexibility of the investment regime;
  3. Incorporation of returns in the design of the fee collection system;
  4. Easier access to voluntary savings for workers.

Since the costs of the creation of additional Investment Funds are marginal compared to those incurred in the case of the SIEFORES, the AFORES would be able to open the necessary number of funds to migrate to a Target Date Funds (TDF) system, or “Life Cycle Funds,” which seems to be the new government’s intention, due to the benefits it entails.

In principle, the proposed changes could benefit workers through the obtainment of higher returns, greater liquidity and facilitating the use of part of the invested funds. However, the true impact of this reform will be assessed in the secondary regulations.

To review this Note, please download it at this link.

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