Without a plan, Mexico would go bankrupt

The issue of pensions is no longer a long-term bomb, but one that can detonate at any moment and lead the government to bankruptcy, experts warn.

Analysts from the Center for Economic and Budgetary Research (CIEP) consider the recent proposals of the current federal administration and the electoral campaigns to be dangerous.

In this six-year term, the amount of pensions for older adults multiplied from 1,160 to 6 thousand pesos every two months. In addition, President Andrés Manuel López Obrador foresees a larger budget in order to solve this program.

In the Pension program for the Well-being of the Elderly, which corresponds to those over 65 years of age, $465,048 million will be spent in 2024.

By 2025, the Executive proposes that it increase to 482,953 million, as it is “a priority program.”

If the trend continues, the pension will reach 7.8% of GDP, calculates Alejandra Macías, director of the CIEP.

Income for 2029 is projected at 20.8% of GDP, but when pensions are subtracted, how much money is left to pay the debt and rescue Pemex? questions the specialist.

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Government on the verge of bankruptcy

Pensions put the government on the verge of bankruptcy, since they are no longer a long-term time bomb and can now detonate at any moment if the recent proposals of the current administration and the electoral campaigns come to fruition, experts and actuaries commented to The universal.

From proposing a replacement rate so that people retire with 100% of their salary, to offering support for people over 60 years of age, they put at risk public finances that already have the explosive burden that debt represents. from Pemex.

Every initiative must be accompanied by a proposal to finance the cost of the proposals to provide more pensions, they noted.

In this six-year term, the amount of pensions for older adults multiplied from 1,160 to 6,000 pesos every two months. However, President Andrés Manuel López Obrador sees a larger budget as necessary in order to finance this program, according to the General Precriteria of Economic Policy 2025, which will serve as the basis for developing the Economic Package for the first year of the government that wins the elections. June 2 elections.

The Pension program for the Well-being of the Elderly corresponds to those over 65 years of age, for which 465 thousand 48 million pesos will be spent in 2024.

By 2025, the Executive proposes that it increase to 482,953 million, as it is a priority program that the Constitution protects.

If the trend continues, the pension will reach 7.8% of the Gross Domestic Product (GDP), considered the director of the Center for Economic and Budgetary Research (CIEP), Alejandra Macías.

Income for 2029 is projected at 20.8% of GDP, but when pensions are subtracted, how much money is left to pay the rest, such as the debt and the rescue of Pemex, he questioned in an interview with this newspaper.

It seems, he said, that it is not a problem to bankrupt the government, but it will prevent meeting other expenses just as important as a pension, such as a universal health and care system. The CIEP sees risks regarding what is proposed in the campaigns. For example, with Claudia Sheinbaum there is talk of a new program that provides bimonthly support, equivalent to half of the pension for those aged 65 and over for women aged 60 to 64. Meanwhile, with Xóchitl Gálvez, it is promised to extend the pension to all people over 60.

The most recent reform initiative that seeks 100% replacement rates for lower-income workers requires anticipating and planning the sources of resources to pay the beneficiaries, said the president of the National College of Actuaries (Conac), Elsa Lorena González. Franyutti. This change is aimed at favoring only employees who have social security and a salary range of less than 16,780 pesos.

Other groups, such as those who work for fees or those who are informal, will not be beneficiaries of this reform, he said. She showed that the challenge of having decent pensions is not exclusive to Mexico, it is a problem throughout the world due to the aging of the population, the decrease in the fertility rate and the lack of planning and savings.

There is great interest from the actuarial union to be participants in the discussions and support the development of public programs that can support proposals in the long term and that cover all sectors, he indicated.

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