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The decumulation phase of the SAR: reflections and proposals – CONSAR – November 2018

10 December, 2018

The current generation of senior citizens in practically the entire planet, has witnessed medical advances and an improvement in health care systems that have enabled increasing the expected survival rate of pensioners in retirement by more than 50%, within half a century. The improvement has also been remarkable in Mexico, since i the life expectancy of senior citizens has increased by four years in the last 40 years.

This discussion paper “The decumulation phase of the SAR: reflections and proposals” highlights the fact that the correct design of the pay-out, or decumulation phase, is crucial for achieving the proper functioning of the pension system, especially if it is based on an individually funded accounts system, in which there must be efficient mechanisms for converting savings into a stable and lifelong income flow.

The decumulation phase is approaching in Mexico, so actions must be implemented to improve its design and operation. The document explains the challenges and possible solutions for improving it. The recommendations of international bodies and some experiences gleaned from other countries, analyzed in this document, could contribute to the discussion of available options.

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