Understanding the ISSSTE Pension System
The Instituto de Seguridad y Servicios Sociales de los Trabajadores del Estado (ISSSTE) manages pension systems for Mexican government employees. There are three main pension regimes: the Abrogated Law, the Décimo Transitorio, and Individual Accounts in Afores.
- Abrogated Law: This regime applies to retirees who were already receiving pensions before the ISSSTE reform in 2007. Pensions are defined based on salary and years of service, funded by solidarity from active workers with a lower minimum retirement age.
- Décimo Transitorio: This regime allowed public servants who were already contributing to ISSSTE during the 2007 reform to maintain their previous scheme. The minimum retirement age was intended to gradually increase, reaching 60 for men and 58 for women by 2028.
- Individual Accounts in Afores: Established with the 2007 reform, pensions in this regime are financed by the retiree’s personal savings accumulated throughout their working life. The minimum retirement age in Afores is 65.
Pension Projections and Government Funding
According to ISSSTE projections, the peak in the number of pensioners will be reached after 2050, with over two million retirees. This peak is expected in 2037 for the Décimo Transitorio regime, which consists of those who remained in the old solidarity pension system before the 2007 reform.
Currently, there are 444,945 pensioners under the Abrogated Law and 821,918 under the Décimo Transitorio regime. The ISSSTE has 1.3 million pensioners in total, with the federal government covering almost all pension expenses, as only 0.1% comes from workers’ contributions.
Impact of Recent Changes
The ISSSTE projections do not account for the recent freezing of the minimum retirement age in the Décimo Transitorio regime by President Claudia Sheinbaum at the request of CNTE teachers. This change may affect future pension trends.
Meanwhile, Individual Accounts in Afores are projected to become the most numerous pension type as other regimes’ pensions gradually disappear. Currently, only 59,490 federal workers are pensioned under this regime.
Key Questions and Answers
- What are the three pension regimes in ISSSTE? The Abrogated Law, Décimo Transitorio, and Individual Accounts in Afores.
- What is the current situation of pensioners in ISSSTE? There are 1.3 million pensioners, with the federal government covering almost all expenses.
- When is the projected peak in ISSSTE pensioners? The peak is expected after 2050, with over two million retirees.
- How do recent changes affect pension projections? The freezing of the minimum retirement age in Décimo Transitorio may impact future pension trends.
