Fraudulent Practices in Unemployment Withdrawals
The reform’s origin traces back to last year when the National Commission for the System of Savings for Retirement (Consar) detected a fraudulent scheme inflating unemployment withdrawal values to historical highs.
The fraudulent practice involved simulating the hiring of a high-salary worker, registering them with the Social Security for one day, and then falsifying their termination to manage a higher unemployment withdrawal amount.
These fraudulent practices were conducted by private offices, misleadingly advertising to workers that they could withdraw thousands of pesos from their Afore accounts in exchange for substantial commissions over the withdrawn amount.
“An estimated 68.8% of the withdrawn unemployment amount originates from these offices, which typically charge between 8,000 and 10,000 pesos per worker,” explained Consar.
Ineffective Response
In response to these practices, by late July 2024, Consar implemented a validation mechanism for unemployment withdrawals to review and confirm the worker’s last registered salary while contributing to Social Security.
Despite this mechanism, unemployment withdrawals continued to rise in subsequent months.
From January to May 2025, workers withdrew 14,465 million pesos through partial unemployment withdrawals, a historical record for the period and a 12% real increase compared to 2024.
It is amidst these record-breaking unemployment withdrawals and nearly a year after Consar’s validation mechanism implementation that the reform is approved to restrict these withdrawals.
What Changes with the Reform?
The reform modifies Article 191 of the Social Security Law, establishing that unemployment withdrawal amounts in Afore’s Modality A will now be calculated using “the average basic contribution wage of the last fifty-two weeks” (one year).
Previously, the law stated that withdrawal amounts were calculated using the “latest basic contribution wage,” allowing offices to register workers with high salaries for a few days, simulate termination, and withdraw more funds from Afore.
Additionally, the withdrawal for those with at least three years in their Afore will now be based on the worker’s cotization seniority, and the 10 UMAs (34,395 pesos) cap previously set by the law is eliminated.
How Do Withdrawals Look After the Reform?
Unemployment withdrawal is a right for all workers with an Afore account, provided they have at least 46 days of unemployment.
There are two withdrawal modalities, now altered as follows:
- Modality A: The smaller of 30 days’ basic contribution average wage from the past year or 11.50% of accumulated resources in the account.
- Modality B: The smaller of 90 days’ basic wage from the past 252 weeks (4.8 years) or 11.50% of accumulated resources in the account.
Access to Modality A requires at least three years of account seniority, while Modality B requires five or more years.
Consar consistently emphasizes that unemployment withdrawals reduce your retirement savings and may prevent pension access upon retirement, as withdrawn amounts subtract cotization weeks.
