Pensions drain Mexico's budget

Pension funds in Mexico are seeing higher yields on investments and increasing contributions, retirement authority Consar noted in its quarterly report. However, federal expenditures to cover pension benefits consumed 32% of spending in 2017, up from 20% in 2016.

Actual pension benefits for most retired Mexicans are also worryingly low, noted the report, particularly for retirees who did not contribute to a pension fund during employment.

The burden on the federal budget is expected to worsen as Mexico's pension system transitions toward an individual retirement account system, phasing out a framework with guaranteed benefits.

In its report to congress, Consar noted that retired workers who contributed to their pension fund during employment saw an average monthly benefit of 5,128 pesos (US$277) for women and 6,602 pesos for men.

The situation is far direr for adults aged 65 and over who did not contribute to a pension fund. They receive on average a monthly government retirement assistance of 608 pesos for women and 611 pesos for men.

According to the report, men with well-paid jobs in the north and center of the country receive higher pensions than elsewhere in the country.

"The pensions the country subsidizes today, derived from pension obligations of – injust – pension benefits schemes defined in the past are regressive; instead of being a leveler of income, they exacerbate inequality," Consar officials said, according to daily El Universal.

Consar asked lawmakers to improve the current pension scheme, adding to multiple calls for a major overhaul of Mexico's retirement framework.

Pension reform, however, effectively stalled, and legislative action appears unlikely until after July's presidential election.