Remember when Chavez in Venezuela took the retirement funds to give them away to the “poor”? MORENA representatives propose the elimination of private retirement funds.
MEXICO – (Times Media Mexico) – AMLO’s government bank “Banco del Bienestar” (The wellbeing bank”) could “administer the individual retirement fund accounts and channel the resources of the sub-accounts”.
An Afore is, according to its acronym in Spanish, a Retirement Fund Administrator, that is, a financial institution that administers, invests and safeguards the contributions of workers in their retirement accounts, under the National Commission of the Retirement Savings System (Consar), which regulates these entities.
On April 21, Edelmiro Santiago Santos Díaz, federal congressman of the National Regeneration Movement -Morena- party, published in the Parliamentary Gazette an initiative to reform the Retirement Savings System Law, proposing the Banco del Bienestar, formerly the National Savings and Financial Services Bank (Bansefi), to administer the Afores.
Although one of the functions of this bank was, according to Milenio, to facilitate savings and access to financing, this institution is focused on the distribution of social programs of the government of Andrés Manuel López Obrador (AMLO).
The Morenistas proposes that the Banco del Bienestar, should be the one to administer the individual accounts and channel the resources of the sub-accounts regularly and professionally. This would remove such attributions from the financial entities (Afores) that currently perform them.
The arguments for this proposal is that the first generation of people registered in the Afores would retire with a pension of 4,475 pesos.
He said that specialists estimate that “in three or four years when the generations registered in the AFORES realize that pensions are so low, the government will have to provide resources” to provide the minimum amount of pensions following the Social Security Law.
The congressman believes that this situation could generate excessive costs to the public treasury and make the savings systems through AFORE “obsolete.”
According to Santos Díaz, this action aims to establish a system in which :
Charges have less commissions for the management of individual accounts, using an existing financial institution in charge of the state, which will reduce the budgetary impact and allow the system to operate immediately. In other words, control of retirement savings funds would become a state responsibility. The proposal seeks to eliminate the 10 Afores that exist in the country so that the government administers the resources.
Millions of Mexicans oppose the proposal on social networks, arguing that it is an “attempt to steal the money” or an act of corruption. According to the Global Corruption Barometer, conducted by the organization Transparency International, 90% of Mexicans think that corruption in the government is a severe problem, and 36% believe that the Mexican administration does not do enough to address the issue.
In 2019, 44% of those polled considered that corruption had increased. Many Mexicans still strongly feel the effects of this practice, which the current president of Mexico regularly claims “to be fighting”.
Banco del Bienestar takes it all
An Afore is a financial institution that, manages, invests and safeguards workers’ contributions in their retirement accounts
If approved, the administrator, in this case Banco del Bienestar, would be the one to carry out the activities that are currently the responsibility of the Afores. In essence, it could receive the income from the administration of the resources of the social welfare funds and have “a fixed capital without the right to fully paid-up retirement.”
In theory, Banco del Bienestar would be subject to the same rights and obligations that the Afores currently have, such as keeping commissions to the required minimum, notifying workers of their commissions and changes in them.
People in Mexico are worried and scared about this actions since it could be the end of their retirement money, as it happened in Venezuela with Chavez.