Background on the Issue
Claudia Sheinbaum, Mexico’s Federal Government President, signed a decree on Monday to reduce the retirement age for ISSSTE (Instituto de Seguridad y Servicios Sociales de los Trabajadores del Estado) employees, starting from the tenth transitional phase in 2028. This decision aims to reverse the gradual increase in the minimum retirement age, which was initially set to reach 58 years for women and 60 years for men by 2028. Instead, the new minimum retirement age will be 53 for women and 55 for men by 2034.
Original Retirement Age Progression
Without the decree, the minimum retirement age for ISSSTE employees would have increased to 58 years for women and 60 years for men by 2028. The minimum service years required to retire remain unchanged at 28 for women and 30 for men.
Financial Implications
Mario Delgado, the Secretary of Public Education, highlighted during a morning press conference on Monday that this reduction in retirement age will have a “very significant fiscal cost,” exceeding 36,000 million pesos during the current administration.
- Current Administration Cost: More than 36,000 million pesos
- Projected 2034 Cost: Around 80,000 million pesos (as per President Sheinbaum)
“In Agreement with Teachers”
President Sheinbaum emphasized that signing this decree, along with another to abolish Usicamm and facilitate teacher transfers between schools, was part of the agreements she made with teachers.
“These are the agreements I reached with all the teachers,” Sheinbaum stated. “Not only is the retirement age for those not enrolled in individual accounts frozen, but it will gradually decrease starting from 2028.”
Sheinbaum also mentioned that the decrees will be published in the Federal Register later on the same day or by tomorrow at the latest.
What is the Tenth Transitional Phase?
Following the 2007 ISSSTE Ley reform, which transitioned the state workers’ pension system from solidarity to individual accounts in Afores, employees who were already working before the reform’s implementation (April 1, 2007) were given the option to join the new system or stay in the old one.
Those who opted to remain in the previous system (90% of state employees at the time) were incorporated into what is known as the “tenth transitional” modality, subject to a gradual, biannual increase in the minimum retirement age.
In 2010, the minimum retirement age for men was 51 years and for women 49 years. By 2024, it had risen to 58 for men and 56 for women.
Without the decree signed today, the minimum retirement age for ISSSTE employees in the tenth transitional phase would have reached 58 years for women and 60 years for men by 2028.
“Unpayable Burden” on Public Finances
Experts from the Mexican Institute of Public Accountants (IMCP) warned that reducing retirement age would represent a “massive expenditure” for the country’s finances and contradict global pension system logic, given the increasing life expectancy.
Key Questions and Answers
- What is the decree about? The Mexican government signed a decree to reduce teachers’ retirement age, reversing the gradual increase initially set to reach 58 for women and 60 for men by 2028.
- What are the new retirement ages? The minimum retirement age will be 53 for women and 55 for men by 2034.
- What are the financial implications? The current administration estimates a fiscal cost of over 36,000 million pesos, while the projected 2034 cost is around 80,000 million pesos.
- What is the tenth transitional phase? It refers to state workers who remained in the old pension system after the 2007 ISSSTE Ley reform, subject to a gradual increase in minimum retirement age.
- Why are experts concerned? They warn that reducing retirement age contradicts global pension system logic and would impose an unpayable burden on public finances due to increasing life expectancy.
