Mexico
Mexico’s retirement income system is based on three main pillars:
- A non-contributory Universal Pension provided by the federal government (“Pensión para el Bienestar de las Personas Adultas Mayores”)
- Mandatory individual retirement savings accounts administered by private pension fund managers (AFOREs) under the Social Security system.
- Voluntary and employer-sponsored private pension plans.
Universal Pension (“Pensión para el Bienestar de las Personas Adultas Mayores”)
- A federal, non-contributory benefit for all adults aged 65 and older.
- Provides a basic income floor, regardless of employment history or prior contributions.
- The benefit is paid every two months and the amount is periodically updated by the federal government (currently MXN 6,200 bimonthly as of 2026).
Social Security Pension (IMSS – Private Sector)
Mexico’s Social Security system for private sector employees operates under two legal regimes due to the 1997 reform:
- 1973 Law (Ley 73) – Defined Benefit (DB): Pension benefits are generally calculated based on salary history and total years of contributions.
- 1997 Law (Ley 97) – Defined Contribution (DC): Retirement income depends on accumulated savings in individual accounts managed by private pension fund administrators (AFOREs).
Individual Savings and Employer-Sponsored Private Pension Plans
In addition to mandatory Social Security savings, individuals may accumulate retirement assets through:
- Employer-sponsored pension plans.
- Voluntary personal retirement savings vehicles.
These arrangements may be structured as defined benefit (DB) or defined contribution (DC) plans and often provide tax incentives under Mexican law.