2019 represented a year of challenges and achievements for the Mexican Retirement Savings System (SAR). According to the Mexican Association of Administrators of Retirement Funds (Amafore), “after the turbulence of the financial markets during the last months of 2018, the capital gains accumulated during 2019 were the highest in the history of SAR, as they rose to 486.4 billion pesos. Today, of each peso managed by the system, 41 cents come from the returns generated.” Additionally, Mexico became the first Latin American country to adopt Target Date Funds for the administration of retirement funds.
“The migration of resources to these new funds was carried out successfully in mid-December, facilitating greater capitalization of workers’ returns and, something that surely, will contribute to improving the pensions of Mexicans,” added Amafore.
However, the association notes that there are still pending issues.
For Bernardo González Rosas, president of the institution, “time is up” to approve a pension reform. Although González would like to see a complete reform to improve the pensions of workers in Mexico, he is aware that this is difficult to achieve, so “we believe that we should start with an indispensable minimum reform: that the mandatory contribution be increased from 6.5% to 15%, which is the indispensable minimum,” he says.
He also considers that “it is very important that the investment reform, which is pending in the Chamber of Deputies, be approved as soon as possible so that we can better invest and diversify the resources of the workers. If we invest part of resources in other countries when Mexico is not doing as well as we would like or does not grow at the rates we would like, we can invest in other countries where such growth is taking place… What is important is to generate the greatest return to the workers.” He emphasized.
Regarding the use of international mutual funds in Afores’ portfolios, González Rosas told Funds Society that although “we still don’t have investments in these funds, we expect it to happen in the following weeks.”
Last September, Amafore highlighted 42 international mutual funds from 11 fund managers so that Afores can consider for their investments. As confirmed by Álvaro Meléndez Martínez, technical vice president of Amafore, the list, which is updated every month, already includes 70 funds from 14 administrators, ten funds and one more manager (JPMorgan) since the last update.
The list of authorized managers consists of:
- Franklin Templeton
- Janus Henderson
- Morgan Stanley
- Wellington Investments