Introduction
On Monday, Mexico’s President Claudia Sheinbaum signed a decree to gradually reduce the minimum retirement age for workers under the ISSSTE’s tenth transitional scheme, starting from 2028. This decision will create a disparity among public servants, with some retiring at 53 and others at 65, depending on whether they have Afores or not.
Expert Opinion
Carlos Ramírez, former president of Mexico’s National Commission for the System of Savings for Retirement (Consar) and a pension expert, warned about the injustice of this measure. He explained that workers under the tenth transitional scheme who are eligible for retirement at 53 will be 12 years younger than those with Afores, who can retire at 65.
Decreto Details
The decree freezes the progressive increase in the minimum retirement age, which was set to reach 58 for women and 60 for men by 2028. Instead, the retirement age will be reduced to 53 for women and 55 for men by 2034.
- Without the decree, the minimum retirement age for tenth transitional scheme workers would have increased to 58 for women and 60 for men by 2028.
- The minimum service years required for public servants to retire remain unchanged at 28 for women and 30 for men.
Financial Impact
Secretary of Public Education Mario Delgado stated that the decree will have a significant fiscal cost of 36,000 million pesos in the current six-year term. President Claudia Sheinbaum mentioned an additional expenditure of 80,000 million pesos over the entire period without specifying the time frame.
Ramírez, however, argues that these figures do not reflect the true cost. According to ISSSTE projections, the majority of the 900,000 workers who will benefit from this decree will start retiring from 2030. Ramírez estimates that the annual cost for public finances will range from 30,000 to 40,000 million pesos, totaling 400,000 million pesons in present value over time.
These costs will be covered by public spending, meaning all Mexicans will pay through their taxes.
Response to CNTE Demands
The signing of this decree, along with another to abolish the Unidad del Sistema para la Carrera de las Maestras y Maestros (Usicamm), follows recent mobilizations by the National Coordination of Education Workers (CNTE) in Mexico City.
Ramírez considers this not a well-thought-out public policy but a response to CNTE pressure.
*What is the Tenth Transitional Scheme?*
Following the 2007 ISSSTE Ley reform, which transitioned the state workers’ pension system from solidarity to individual accounts in Afores, employees had to choose between joining the new system or staying in the old one. Those who opted for the latter, accounting for 90%, were incorporated into the tenth transitional scheme, subject to a gradual increase in their minimum retirement age every two years.
- In 2010, before the incremental increase began, the minimum retirement age was 49 for women and 51 for men.
Key Questions and Answers
- What is the main issue with the decree? The decree creates a disparity among public servants, allowing some to retire at 53 while others can retire at 65, depending on whether they have Afores or not.
- How will this decree affect public finances? According to Ramírez, the true cost of this decision will be felt from 2030 onwards, with an estimated annual expenditure of 30,000 to 40,000 million pesos, totaling 400,000 million pesos in present value.
- Why was this decree signed? The signing follows recent mobilizations by the CNTE. Ramírez suggests it’s a reaction to their pressure rather than a well-planned public policy.
- What is the tenth transitional scheme? This scheme was created for state workers who chose not to transition to the new pension system based on individual accounts (Afores) following the 2007 ISSSTE Ley reform. These workers face a gradual increase in their minimum retirement age.
