Understanding the Mexican Pension System and its Inequalities
The pension system in Mexico is marked by significant disparities, reflected in the varying purchasing power of households and other social aspects like healthcare deficiencies. Unlike many countries with a national or uniform model, Mexico’s social security system is highly fragmented, according to the Center for Studies of Public Finances (CEFP).
Pension Breakdown by Institution
- Pemex: 620,109 pesos
- ISSSTE: 279,982 pesos.
- IMSS: 179,609 pesos.
- Pension for the Well-being of Older Adults (PBAM): 43,152 pesos.
- Pension for people with disabilities: 34,580 pesos.
- Pension for Women of Well-being: 19,278 pesos.
Vast Disparities in Pension Amounts
This implies that the so-called “golden pensions” for CFE workers are significantly larger than non-contributory pensions (government-provided, like those for older adults) and even those of working-class individuals, such as IMSS and ISSSTE.
- 50.0 times greater than Women of Well-being pension
- 27.9 times greater than pensions for people with disabilities
- 22.3 times greater than PBAM pension
- 5.4 times greater than IMSS pension
- 3.4 times greater than ISSSTE pension
- 1.6 times greater than Pemex pension
Impact on People’s Lives
“The pension system is fragmented, leading to differential benefits,” states CIEP in the document “Implications of the 2026 Economic Package.”
These disparities have a significant impact on people’s lives, not just their wallets, but also other aspects such as health and social mobility.
According to the Organization for Economic Co-operation and Development (OECD), there is growing evidence that income heterogeneity not only negatively affects economic growth but also has other negative effects, such as decreased social mobility and reduced learning opportunities in education. Moreover, the OECD study “Income Inequality: The Gap Between Rich and Poor” highlights that income disparity could be linked to other social ills, like higher crime rates and poorer health.
Government Efforts to Address the Issue
On August 29, Raquel Buenrostro, head of the Anti-Corruption and Good Governance Secretariat, acknowledged the existence of “exorbitant” pensions for former Luz y Fuerza del Centro (LyFC) and Pemex employees, with monthly amounts reaching one million pesos.
She noted that the average monthly pension nationwide is 7,092 pesos, making the LyFC pension 140 times greater. The government intends to review these pensions’ legality and take appropriate action.
“This measure could contribute to reducing the current disparity in federal pension distribution and likely decrease it slightly,” CIEP highlighted.
Key Questions and Answers
- What are the main pension institutions in Mexico? The primary pension institutions in Mexico are Pemex, ISSSTE, IMSS, and government-provided pensions like the Pension for the Well-being of Older Adults (PBAM), pensions for people with disabilities, and pensions for women.
- How do pension amounts vary among these institutions? Pension amounts show significant disparity, with CFE workers receiving the highest pensions (up to one million pesos monthly), followed by ISSSTE, IMSS, and government-provided pensions.
- What are the implications of these disparities? These disparities impact not only people’s wallets but also their overall quality of life, social mobility, and access to healthcare.
- What is the Mexican government doing about this issue? The Mexican government acknowledges the existence of exorbitant pensions and plans to review their legality, aiming to reduce disparities in federal pension distribution.
