Changes to Mexico’s pension law, signed by the president on 9 Dec 2020, aim to strengthen the pension system and improve employees’ financial well-being in retirement. The reforms will increase retirement benefits to eligible workers under the Social Security 1997 Law, and will increase the total contribution amounts to levels comparable with other OECD countries.
The reforms began on 1 Jan 2021, and changes to contribution amounts, and the calculation of, and eligibility for, guaranteed pensions will be phased in over an eight-year period.
The reforms will result in a three-fold cost increase for employers, depending on the applicable salary structure. Companies should analyze their compensation structures to minimize the cost increases, and consider optimizing the use of private retirement plans to improve their employees’ financial wellness.
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