Who are Afores and why are they important?
Administradoras de Fondos para el Retiro (Afores) are investment funds established in 1997 as part of the Sistema de Ahorro para el Retiro (SAR). These funds manage individual retirement accounts for working individuals in Mexico. Initially, there were 17 Afores, and currently, there are 10 operating in the market.
Afore PensionISSSTE caters to state employees, while Afore XXI (now known as XXI Banorte) served IMSS workers before merging with Banorte. Over the years, there have been mergers, dissolutions, and consolidations among Afores.
Afore performance and recent investments
According to official figures, as of August, Afores have invested 978.932 million pesos in the infrastructure sector, which accounts for 12.6% of their total net assets. Out of this, 331.939 million pesos are invested in energy and 41.107 million pesos in housing. These sectors are crucial for future retirement investments.
The Afores currently manage 8.1 trillion pesos in workers’ savings, with more than half being interest-based returns. This is distributed across 69 million accounts. However, a significant portion of the working population remains in informal employment and may not have access to a formal pension, though they are entitled to the Adults’ Pension, a constitutional right.
Regulatory changes and future prospects
The Comisión del Sistema de Ahorro para el Retiro (Consar) has made necessary amendments to the SAR law to boost retirement savings and ensure that the replacement rate exceeds at least 70% of the last salary earned during one’s working life.
Currently, Afores can invest in long-term instruments like Fibras and CKDs. The Plan México is considered a promising option, provided the projects are proven to be financially viable.
As per official data, Afores have invested 978.932 million pesos in infrastructure as of August, with 331.939 million pesos allocated to energy and 41.107 million pesos to housing. These sectors are key areas for future retirement investments.
Insights from Afore directors
In this Amafore 2025 supplement, the editor spoke with directors from nine participating Afores and the vocal executive of PensionISSSTE. All agreed that as long as the government and private sector offer long-term projects with proper corporate governance, Afores will continue to invest.
The directors emphasized that retirement savings will keep growing, currently representing nearly 23% of the GDP. By 2040, this proportion is expected to double.
Understanding how retirement savings are invested is crucial for ensuring a secure future.
Key Questions and Answers
- What are Afores? Administradoras de Fondos para el Retiro (Afores) are individual retirement accounts managed by private companies under the Sistema de Ahorro para el Retiro (SAR) established in 1997.
- Why are Afore investments important? Afores manage a significant portion of workers’ retirement savings, currently totaling 8.1 trillion pesos. Understanding their investment strategies ensures a secure retirement.
- What sectors do Afores invest in? As of August, Afores have invested heavily in infrastructure (12.6% of net assets), with notable allocations to energy (331.939 million pesos) and housing (41.107 million pesos).
- What changes have been made to improve Afores? Consar has amended the SAR law to boost retirement savings and ensure a replacement rate of at least 70% of the last salary earned.
- What are long-term investment options for Afores? Afores can invest in long-term instruments like Fibras and CKDs, as well as promising projects such as Plan México, provided they are financially viable.
