Pension Reform in Mexico: The Evolution of Pension Fund Management Fees and their Effect on Pension Balances
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.
- In 1997 Mexico introduced Personal Retirement Accounts to replace the pay-as-you-go public retirement system.
- We use administrative data to assess how pension fund management fees affect pension accumulations.
- Fees can drain up to a quarter of individuals’ pension savings.
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- UM08-16: Pension Reform in Mexico: The Effect of Personal Retirement Accounts on Preparation for Retirement
Paper IDWP 2008-196