Pension Reform in Mexico: The Effect of Personal Retirement Accounts on Preparation for Retirement

Published: 2008
Project ID: UM08-16


In 1997 Mexico introduced Personal Retirement Accounts (PRAs) which, after a transition phase, will completely replace the pay-as-you-go (PAYG) system. We give a detailed overview of the relevant institutional framework, the market of PRA providers and how it has evolved since the 1997 reform.  We use administrative data obtained from CONSAR, the regulatory agency of the PRA system to assess how pension fund management fees affect pension accumulations.  We find that fees can drain up to a quarter of individuals’ pension savings.