Mexico Pension Plan
Encyclopedia
Mexico reformed its pension
system in 1997, transforming it from a pay as you go
(PAYG), defined benefit (DB) scheme to a fully funded, private and mandatory defined contribution (DC) scheme. The reform was modeled after the pension reforms in Chile in the early 1980s and was a result of recommendations from the World Bank
. Participants in the Mexican system choose from a variety of private pension fund managers called Administradores de Fondos para el Retiro (AFOREs). AFOREs are responsible for managing inidividual accounts and investing savings in the pension funds called Sociedades de Inversion Especializadas pare el Retiro (SIEFOREs). SIEFOREs are separate legal entities with their own Board of Directors, and segregated assets from AFOREs.
Pension
In general, a pension is an arrangement to provide people with an income when they are no longer earning a regular income from employment. Pensions should not be confused with severance pay; the former is paid in regular installments, while the latter is paid in one lump sum.The terms retirement...
system in 1997, transforming it from a pay as you go
Pay as you go
Pay as you go may refer to:*PAUG, a structured financial product*"Pay as you go" or "Pay & Go", a general term for the concept of a prepaid mobile phone....
(PAYG), defined benefit (DB) scheme to a fully funded, private and mandatory defined contribution (DC) scheme. The reform was modeled after the pension reforms in Chile in the early 1980s and was a result of recommendations from the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
. Participants in the Mexican system choose from a variety of private pension fund managers called Administradores de Fondos para el Retiro (AFOREs). AFOREs are responsible for managing inidividual accounts and investing savings in the pension funds called Sociedades de Inversion Especializadas pare el Retiro (SIEFOREs). SIEFOREs are separate legal entities with their own Board of Directors, and segregated assets from AFOREs.