Introduction to Afores and Their Growth
Julio César Cervantes Parra, the president of Mexico’s National Commission for the Retirement Savings System (Consar), estimates that savings in Afores will reach 12 billion pesos by 2030 and surpass 30 billion pesos by 2050. These figures will account for over 50% of Mexico’s Gross Domestic Product (GDP) by 2050, making Afores the primary funding source for the country.
Current Status and Future Implications
Currently, Afores manage 8.1 billion pesos, equivalent to 23% of Mexico’s national GDP. Cervantes highlights that this situation presents a “magnificent opportunity” to accelerate economic growth while posing a “great challenge” to efficiently channel these substantial resources.
He emphasizes that workers’ retirement savings in Afores not only secure their future but also stimulate the present by investing in infrastructure that fuels development. “Every well-invested peso in infrastructure, innovation, and clean energy transforms into productivity, employment, and well-being,” Cervantes explains. “Thus, the pension system directly contributes to economic growth and national competitiveness, making savings a driving force for national development.”
Afores as Strategic Allies for Infrastructure Development
Guillermo Zamarripa, president of the Mexican Association of Afores (Amafore), stresses that workers’ funds are well-invested by Afores, as evidenced by the returns achieved over 28 years.
Zamarripa notes that of the more than 8 billion pesos managed by Afores, 57% come from returns. He also highlights that the Retirement Savings System (SAR) has become a cornerstone of internal savings and an economic and social development driver in Mexico.
“The SAR has been the foundation for building an internal savings base, which is crucial for Mexico in terms of size and longevity,” Zamarripa states. “That’s why it has become one of the anchors of Mexico’s economic stability.”
Zamarripa acknowledges that, although the SAR has progressed in recent years, it still hasn’t reached its “final destination” due to evolving conditions. He also emphasizes that Afores view themselves as strategic allies of the government for financing infrastructure crucial to Mexico’s development.
“Our long-term financing capacity and risk appetite convince us that we will continue investing in promising projects,” Zamarripa asserts.
SAR Perfection and Improvement
Zoé Robledo, director general of the Mexican Social Security Institute (IMSS), affirms that the 2020 reform to the SAR Ley has resulted in a perfected and improved system.
“In 2019, workers were protesting against a system they felt was not benefiting them but instead taking something away,” Robledo explains. “Today, that’s no longer the case, demonstrating the SAR’s perfection and strengthening.”
Robledo describes how IMSS workers save 15% of their salary, leading to better pensions upon retirement. These resources are primarily held in Afores XXI Banorte.
Key Questions and Answers
- What are Afores? Afores, or Administraciones de Fondos para el Retiro, are private pension funds in Mexico that manage workers’ retirement savings.
- Why are Afores important? Afores manage significant savings, which will reach 12 billion pesos by 2030 and over 30 billion pesos by 2050, accounting for more than 50% of Mexico’s GDP. This makes them the primary funding source for the country.
- How do Afores contribute to economic growth? By investing in infrastructure, innovation, and clean energy, Afores boost productivity, employment, and well-being, directly contributing to economic growth and national competitiveness.
- What role do Afores play in infrastructure development? Afores view themselves as strategic allies of the Mexican government for financing crucial infrastructure projects, leveraging their long-term financing capacity and risk appetite.
- How has the SAR evolved? The 2020 reform to the SAR Ley has led to a perfected and improved system, addressing workers’ concerns and ensuring better pensions for IMSS workers who save 15% of their salary.
