LatinNews Daily - 23 April 2024

*Mexico’s lower chamber of deputies has approved a reform to create a new pension fund with 252 votes in favour, 212 against, and four abstentions. Under the reform, the fund would be established by the finance ministry (SHCP) as a public trust in which the central bank (Banxico) would act as trustee. The fund would not be considered a parastatal entity. The reform also dictates that private fund administrators (Afores), as well as the service provider administrators, must transfer funds from the retirement sub-account (Subcuenta de Retiro, Cesantía en Edad Avanzada, y Vejez, RCV), in which workers, employers and the government make mandatory contributions to cover retirement insurance, severance at old-age and advanced-age, to the pension fund when workers reach 70 years of age, without the need for a judicial resolution. In the case of state workers, pension providers must transfer resources to the new fund when workers reach 75 years of age. The ruling Movimiento Regeneración Nacional (Morena) states that the new fund aims to ensure workers can retire with pensions equal to 100% of their pre-retirement salaries, up to a maximum amount of the average monthly salary registered in the national social security system (IMSS), which equates to M$16,777 (US$979.90) a month. The reform will now pass to the senate.