Introduction to the OECD Pension Analysis Report
The Organisation for Economic Co-operation and Development (OECD) publishes a comprehensive biannual report titled “Pensions at a Glance 2025.” This report provides detailed data and analysis on the evolution and pension situation of its member countries, enabling international comparisons of pension systems. The latest edition offers insights into major reforms and changes in various pension systems, gender gap analysis, demographic context, system design, and pension rights under different scenarios.
Key Pension Reforms in Mexico
The 2025 report highlights recent pension reforms in Mexico, particularly the May 2024 reform aimed at balancing the replacement rate (TR) for lower-income contributors in the Afore contribution-defined system. The new design ensures a 100% TR up to an average monthly salary cap at the time of reform implementation. The gap between the calculated pension and this cap is covered by government resources from the Well-being Pensions Fund (FPB), established for this purpose. However, the OECD raises concerns about the long-term funding sources for the FPB, as proposed government funding methods seem unviable. Moreover, the idea to tap into inactive account balances in Afores and not yet claimed by their owners is criticized.
Funding Challenges for the FPB
The OECD acknowledges the positive intent behind improving lower-income system Afore pensions but questions its long-term funding. This inevitably puts additional strain on already stretched public finances.
Income and Poverty Among Mexican Seniors
The report also delves into the income and poverty situation of Mexican adults aged 65 and over. Major income sources for this demographic include wages (50%), private occupational transfers (26%), public transfers (13%), and capital resources (11%). Notably, despite social programs, public transfers contribute little to seniors’ income, and many continue working informally past retirement age.
- Comparison with OECD Averages:
- Public transfers: 55%
- Work: 28%
- Capital: 9%
- Private transfers: 8%
Poverty Rates Among Seniors
According to the OECD, the overall poverty rate in Mexico is 16%, while it stands at 20% for adults aged 65 and over. The respective OECD averages are 11% and 15%.
Income Inequality Among Seniors
Mexico has the second-highest Gini coefficient for available income among seniors (0.433), surpassed only by Costa Rica (0.486). The OECD average Gini coefficient is 0.308, indicating a high level of income inequality among Mexican seniors aged 65 and over.
