Mexican President Andres Manuel Lopez Obrador
Credit: Reuters Photo
Mexico City: Mexico's Senate approved the creation of a new pension fund on Thursday aimed at boosting payouts to the lowest-earning recipients.
The creation of the fund, which is part of a pension reform proposed by outgoing President Andres Manuel Lopez Obrador, won the support of 70 senators, with 43 against and two abstentions, after a heated debate that went into the evening.
The reform aims to ensure that pensioners receive 100 per cent of their last monthly salary up to about 16,777 Mexican pesos ($975), which is the average monthly wage for workers affiliated with Mexico's social security institute.
After passing in the Senate, which followed approval by the Lower House of Congress earlier this week, the bill will now go to Lopez Obrador to sign into law.
Since 1997, control of Mexico's pension system has been in the hands of private fund administrators, known as "afores," which at the end of March managed more than 6.1 trillion Mexican pesos, according to data from pension system regulator Consar.
Lopez Obrador has called the 1997 "a great injustice" and his interior minister last week said it was "disastrous."
On the Senate floor on Thursday, Senator Geovanna Banuelos said she supported the reform "so that the workers of this country can enjoy a retirement that gives them dignity and justice."
The fund will be initially start up with about 40 billion Mexican pesos ($2.32 billion) in unclaimed savings held by workers over 70 years of age in inactive accounts with afores.
Critics have said this could jeopardize the savings of some Mexicans managed by afores, which the government denies.
"The 40 billion pesos have a first and last name of Mexican workers, who for many reasons ... cannot access their afores," opposition Senator Nancy de la Sierra said.
"They are not inactive accounts. They are accounts that have an owner."
Mexico's association of retirement fund entities has said individuals continued to have control over their accounts and that would not change with the new initiative.
Thursday's vote comes less than two months before Mexicans vote in general elections on June 2.
Claudia Sheinbaum, presidential candidate for Lopez Obrador's ruling National Regeneration Movement (MORENA), holds a strong lead.
On Thursday, Xochitl Galvez, the leading opposition contender in the race for president, told supporters the government was using the reform to "steal your money."
"What MORENA really wants to do is use Mexicans' savings to send to a public fund and use it how they wish," Galvez said.
($1 = 17.2091 Mexican pesos)