Protego Investment Associates
NBER Working Papers and Publications
|January 1998||Pension System Reform: The Mexican Case|
with Fernando Solis-Soberon, Alejandro Villagomez-Amezcua
in Privatizing Social Security, Martin Feldstein, editor
|September 1996||Pension System Reform: The Mexican Case|
with Fernando Solis-Soberon, Alejandro Villagomez-Amez: w5780
The paper analyzes the Mexican pension reform of December 1995. Essentially, the reform substituted a defined-benefit pay-as-you-go system with a fully funded defined contribution system based" on individual accounts with a minimum pension guarantee provided by the government. Total contributions to the accounts will amount to 13.5 percent of the salary for the average worker plus 2.5 percent for disability and life insurance that will still be managed by the government's Social Security Institute (IMSS). The new system shares many common elements with other Latin American experiences. However, it shows some advantages and disadvantages with respect to them. Regarding the advantages, the new system completely substitutes the old system; administrative costs are reduced by limiting the n...