Background on the ISSSTE and Relevant Parties
The Instituto de Seguridad y Servicios Sociales de los Trabajadores del Estado (ISSSTE) is Mexico’s social security institute for government employees. Claudia Sheinbaum, the head of Mexico City’s government and President Andrés Manuel López Obrador’s representative, recently signed a decree to reduce the retirement age for ISSSTE workers in the tenth transitional group. This move aims to reverse the gradual increase in the minimum retirement age that was initially set to conclude in 2028.
Mario Delgado, the Secretary of Public Education, highlighted that this adjustment would have a “very significant fiscal cost,” exceeding 36,000 million pesos during the current administration.
Key Changes in Retirement Age
- Without the decree, the minimum retirement age for ISSSTE workers in the tenth transitional group was projected to reach 58 years for women and 60 years for men by 2028.
- The decree reduces the minimum retirement age to 53 years for women and 55 years for men by 2034.
- Minimum service years required for public servants to retire remain unchanged at 28 years for women and 30 years for men.
“In Agreement with Teachers”
Sheinbaum emphasized that the decree, along with another to abolish Usicamm and facilitate teacher mobility between schools, was part of agreements made with educators.
“These are the agreements I reached with teachers, both male and female,” Sheinbaum stated. “Not only is the retirement age for those not included in individual accounts frozen, but it will gradually decrease starting from 2028.”
The decrees will be published in the Official Gazette of the Federation later the same day or by tomorrow, according to Sheinbaum.
What is the Tenth Transitional Group?
Following the 2007 reform to the ISSSTE law, which transitioned the state workers’ pension system from solidarity-based to individual accounts in Afores, employees who were already working before the reform took effect (April 1, 2007) were given the option to join the new system or stay in the old one.
Those who opted to remain in the previous system (90% of state employees at the time) were incorporated into what is known as the tenth transitional group, subject to a gradual increase in their minimum retirement age every two years.
- In 2010, the minimum retirement age for men was 51 years and for women it was 49 years.
- By 2024, the minimum retirement age had risen to 58 years for men and 56 years for women.
Without the decree signed today, the minimum retirement age for ISSSTE workers in the tenth transitional group would have reached 58 years for women and 60 years for men by 2028.
“Unpayable Burden” on Public Finances
Experts from the Mexican Institute of Certified Public Accountants (IMCP) warned that reducing the retirement age would not only represent a “massive expenditure” for the country’s finances but also contradicts the logic of pension systems worldwide, given the increasing life expectancy.
- Cristina Zoé Gómez Benavides, a member of the Representative Commission before Social Security Organisms (CROSS) at IMCP, stated that with the current life expectancy of 76 years, reducing retirement age means the state would need to provide pensions for 20-25 years, which becomes “unpayable.”
- Rolando Silva, vicepresident of the IMCP’s Fiscal Technical Commission, cautioned that the substantial expenditure associated with reducing retirement age would significantly impact the nation’s financial situation.
Key Questions and Answers
- What is the ISSSTE? The Instituto de Seguridad y Servicios Sociales de los Trabajadores del Estado (ISSSTE) is Mexico’s social security institute for government employees.
- Who are the relevant parties? Claudia Sheinbaum, head of Mexico City’s government, and Mario Delgado, Secretary of Public Education, are key figures in this decision.
- What changes were made to the retirement age? The minimum retirement age for ISSSTE workers in the tenth transitional group will be reduced from 58 (women) and 60 (men) to 53 (women) and 55 (men) by 2034.
- What is the fiscal impact? The federal government estimates a significant fiscal cost of over 36,000 million pesos during the current administration.
- What is the tenth transitional group? This group consists of ISSSTE workers who remained in the pre-2007 pension system and have experienced a gradual increase in their minimum retirement age.
- What concerns do experts raise? IMCP experts warn that reducing retirement age contradicts the logic of pension systems worldwide, given increasing life expectancy and the resulting “unpayable” burden on public finances.
