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Última actualización: 13:15 / Tuesday, 16 de July de 2019
At AforeMX

Carstens Says Mexican Pension Funds Could Learn From Behavioral Economics

Carstens Says Mexican Pension Funds Could Learn From Behavioral Economics
Carlos Noriega and Agustín Carstens at AforeMX
  • 2017 has been of significant capital gains and a good level of collection
  • The contribution rate of Mexican workers is one of the lowest in the OECD
  • Latin America offers investment opportunities because it has a large percentage of workers compared to the general population
  • Carstens says an increase in mandatory contributions could favor informal employment
By Gabriela Huerta

Celebrating the 20th anniversary of the Mexican Pension funds, the Afores, Mexican financial authorities, OECD and IDB representatives along with international experts, specialists, academics and investors met in Mexico City for the Second Afores National Convention and the 15th FIAP international seminar.

In the event, Carlos Ramírez Fuentes, president of the Mexican Pension system regulator, Consar, said that this year has been of significant capital gains and a good level of collection, but that the discussion on commissions for 2018 is expected to be "complicated". The participants also recognized that the contribution rate of Mexican workers is one of the lowest in the OECD.

In his speech, the Bank of Mexico's Governor, Agustín Carstens, commented on "the virtuous circle that is produced thanks to the synergies that have been generated by the reform of the pension system and the autonomy of the Bank of Mexico, with its consequent impact on the savings in our country," but he noted that the system faces enormous challenges that must be addressed in a coordinated manner. "The current pension system has a low coverage, to the first quarter of 2016 the contributors to social security in Mexico represented only 27% of the population of working age, which places our country below countries like Chile ( 40%), Costa Rica (41), Panama (47) and Uruguay (65)," he said.

Robert Kapito, president of BlackRock, said that Latin America offers investment opportunities because it has a large percentage of workers compared to the general population, but stresses the need to improve its performance and savings capacity, following the example of emerging Asia. In his opinion, this can be achieved through an improvement in financial education, an increase in women in the workforce, adjustments to policies and regulations, as well as an evolution of investment solutions. "Definitely if people in Latin America know more about their finances and their future financial needs, that would help economic growth," he said.

Meanwhile, Guillermo Arthur, president of FIAP, warned that short-term solutions should not be sought in Mexico, since doing so could lead the country to face a crisis like the one currently experienced in Chile. While the Undersecretary of finance SHCP, Vanessa Rubio, said that "we must think of an increase to mandatory contributions, in voluntary contributions, in the possibility of giving incentives for this, and in perhaps gradually increasing the retirement age. " However, Carstens stressed that "while establishing an increase in mandatory contributions could be reasonable, (...) this measure alone could generate incentives that would favor informal employment", proposing the use of schemes such as 2017 Nobel Prize winner, Richard Thaler's nudges, to automatically enroll workers in voluntary savings schemes. The central banker concluded that although there are still important challenges, he is convinced that "with the will and commitment of the institutions, the authorities and the employer and union sector, the necessary measures will be implemented for the benefit of the workers and the country as a whole. "

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