Observation (CEACR) - adopted 1998, published 87th ILC session (1999)

Social Security (Minimum Standards) Convention, 1952 (No. 102) - Mexico (Ratification: 1961)

With reference to its previous comments, the Committee recalls that, following the coming into force of the new Social Security Act of 1 July 1997, which concerns in particular the branches for which Mexico has accepted the provisions of the Convention, the Mexican social security system has undergone far-reaching changes, especially with regard to pensions. In this respect, the Committee also notes the Act respecting retirement savings systems of 25 April 1996 and the regulations issued thereunder. The new legislation associates the private sector with the achievement of the objectives pursued by social security. Subject to certain transitional measures, workers who are insured under the Mexican Social Security Institute now have to open an individual account with a retirement fund administration company (AFORES) of their choice. This individual account receives the contributions paid by the worker, the employer and the State. Retirement fund administration companies are the financial entities with the exclusive responsibility of managing the individual accounts of their insured persons and are subject to authorization by the National Commission of the Retirement Savings System. AFORES invest the resources placed in the individual accounts through companies which specialize in the investment of retirement funds (SIEFORES). These latter must also obtain authorization from the above Commission, which is also responsible for supervising their activities and those of the AFORES. These companies earn commissions which are debited to the individual accounts of workers. At the time of their withdrawal, workers convert the balance of their individual account into a pension which may take the form of an annuity or a programmed retirement pension. The resources accumulated in the individual accounts also serve to finance invalidity and survivors' benefits. Workers may also, under certain conditions, withdraw amounts from their individual accounts for specific purposes (marriage, unemployment, etc.). Furthermore, the State guarantees a minimum pension, the monthly amount of which is equivalent to the general minimum wage for the federal district.

The Committee also recalls that the new Mexican social security system was the subject of a communication received in June 1997 from a group of workers' organizations which consider that the reform of the social security system is prejudicial to workers and their families and suppresses certain fundamental rights, including the guarantee of full health protection. These organizations also refer to the risks implied by the new system of individual capital accumulation and the private administration of pensions, as well as the deterioration of health services. The increase in the qualifying period for entitlement to a retirement pension is also criticized by these organizations. These observations were transmitted to the Government in August 1997.

The Committee has examined the report provided by the Government for the period 1996-1997 in the light of the new legislation. It notes that this report, which contains a detailed description of the new provisions of the Social Security Act, does not include all the information, and particularly the statistics, which are necessary for it to make a full assessment of the manner in which the new legislation ensures the application of the Convention.

The Committee therefore wishes to draw the Government's attention to and/or be provided with information on the following points. It also hopes that the Government will not fail to provide the information that it considers necessary in response to the observations made by the above workers' organizations.

I. Level and duration of benefits

1. Sickness benefit (Article 16) and maternity benefit (Article 50) of the Convention. The Committee notes that under section 92 of the Social Security Act, sickness benefit is set at 60 per cent of the last wage subject to contributions. Maternity benefit is equal to the last wage subject to contributions under the terms of section 101 of the Social Security Act. In its report, the Government refers to Article 66 of the Convention for the calculation of sickness benefits. In this respect, the Committee reminds the Government that, since sickness and maternity benefit are, in accordance with the Social Security Act, dependent on the previous earnings of the beneficiary, Article 65 of the Convention is applicable. In these conditions, the Committee would be grateful if the Government would indicate in its next report whether, and if so under which provisions, the wage that is subject to contributions and/or the level of sickness and maternity benefit are subject to a ceiling. If so, it requests the Government to provide all the statistics required by the report form under Article 65 (Titles I, II and V).

2. Old-age benefits (Articles, 28, 29 and 30). (a) The Committee recalls that, according to these provisions of the Convention, read in conjunction with Part XI (Standards to be complied with by periodical payments), the level of the old-age benefit shall be equivalent to 40 per cent of the reference wage for a standard beneficiary who has completed a qualifying period which may be 30 years of contribution or employment, or 20 years of residence. This level of benefit must be granted throughout the contingency, irrespective of the type of pension selected (annuity or programmed retirement). The Committee notes that, for persons who fulfil the qualifying conditions for an old-age pension set out in the legislation, the level of the benefit would not appear to be determined in advance, but depends on the capital accumulated in the individual accounts of workers, and particularly on the return obtained on that capital. However, under the terms of section 170 of the Social Security Act, the State guarantees workers who fulfil the age conditions and the qualifying period set out in section 162 of the Act with a "guaranteed pension", the amount of which is equivalent to the general minimum wage for the federal district. In these conditions, the Committee hopes that the Government will be able to provide with its next report all the statistics requested in the report form under Article 66, in order to enable it to determine whether in practice the minimum amount of the old-age pension attains the percentage required by the Convention.

(b) The Committee requests the Government to indicate the manner in which the application of Article 30 of the Convention (payment of the benefit throughout the contingency) is ensured for the "programmed retirement" method, as set out in section 159 of the Social Security Act. Please indicate in particular whether, once the accumulated capital in the individual account is exhausted, the beneficiary is entitled to receive the "guaranteed pension" envisaged in section 170 of the Social Security Act.

(c) The Committee notes that, under section 162 of the Social Security Act, workers are entitled to an old-age pension when they reach the age of 65 years and have completed a minimum qualifying period of 1250 weeks of contribution. The Committee requests the Government to indicate in its next report the manner in which effect is given to Article 29, paragraph 2(a), of the Convention, which provides that a reduced benefit shall be secured at least to a person protected who has completed, prior to the contingency, a qualifying period of 15 years of contribution or employment.

3. Employment injury benefit (Article 36), invalidity benefit (Articles 56 and 57) and survivors' benefit (Articles 62 and 63). The Committee would be grateful if the Government would provide all the statistical information required by the report form on the calculation of benefits required under Article 65 (Titles I, II and IV).

Furthermore, the Committee notes that, under the terms of section 141 of the Social Security Act, the invalidity pension for workers who have completed the qualifying period set out in section 122 is equivalent to 35 per cent of the average wage paid during the 500 weeks prior to the provision of the pension, adjusted in accordance with the national consumer price index. The amount of the benefit is increased, among other elements, by family benefits. The amount of the survivors' benefit provided to a standard beneficiary (widow with two children) is also 35 per cent of the above wage, under the terms of sections 131, 135 and 144 of the Social Security Act. The Committee recalls in this respect that, in accordance with the above provisions of the Convention, in conjunction with Part XI (Standards to be complied with by periodical payments), the invalidity benefit, increased by the amount of any family allowances, provided to a standard beneficiary (man with wife and two children) shall be at least 40 per cent of the previous earnings and family allowances received by the beneficiary when he was working. The amount of the widow's pension must also, for a standard beneficiary (widow with two children), be 40 per cent of the previous earnings of the family breadwinner (including the family allowances payable both during employment and during the contingency).

However, the Committee notes that both the invalidity pension and the widow's pension may not be lower than the "guaranteed pension", which is equal to the general minimum wage for the federal district (sections 141 and 170). In these conditions, the Government may wish to refer to the provisions of Article 66 of the Convention, to which it may also have recourse, and the Committee requests it to provide with its next report all the statistics required by the report form under this provision of the Convention (Titles I, II and IV).

II. Adjustment of benefits (Articles 65, paragraph 10, and 66, paragraph 8)

The Committee notes the information provided by the Government on the changes in the cost of living and minimum wage during the period covered by the report. In order to be able to fully assess the manner in which effect is given to these provisions of the Convention, which provide for the adjustment of long-term benefits to the cost of living or the general level of earnings, the Committee would be grateful if the Government would provide in its next report all the statistical information required by the report form under Article 65 (Title VI) including fluctuations in the cost of living, changes in the general level of earnings and changes in benefit levels (average per beneficiary and benefit for a standard beneficiary), as well as changes in minimum benefit levels.

III. Financing of benefits (Article 71, paragraphs 1 and 2)

The Committee notes the information concerning the financing of the various benefits. It requests the Government to provide in its next report the statistical information required by the report form under Article 71 (point 3) for the Parts of the Convention which have been accepted by Mexico.

IV. Administration and control of the social security system (Articles 71, paragraph 3, and 72, paragraph 1)

The Committee notes the information contained in the Government's report. It would be grateful if the Government would indicate the measures taken in practice to ensure the application of Articles 71, paragraph 3 and 72, paragraph 2, of the Convention. In this respect, it recalls the importance of undertaking periodical actuarial studies and calculations, as required by Article 71, paragraph 3.

V. Participation of protected persons in the administration of social security (Article 72, paragraph 1)

The Committee notes the information provided by the Government. It would be grateful if the Government would indicate in its next report whether and, if so, the manner in which the representatives of the persons protected participate in the administration of AFORES and SIEFORES, which form an integral part of the social security system.

VI. Coverage of the system (Articles 9, 15, 27, 33, 48, 55 and 61, in relation to Article 76(b)(i)

The Committee notes the information provided by the Government to the effect that the social security scheme applies in particular to all employees, among other persons. It would be grateful if the Government would provide in its next report all the statistical information required under Article 76, paragraph 1(b)(i), of the report form (Title I).

VII. Finally, the Committee would be grateful if the Government would provide detailed information with its next report on the implementation of the transitional measures with regard to persons who are already insured under the Mexican Social Security Institute before the coming into force of the new Social Security Act. Please also indicate the measures adopted, in accordance with Article 65, paragraph 10, of the Convention, to ensure the adjustment of old-age, invalidity and survivors' benefits, as well as employment injury benefit, which have been or will be provided under the former system of redistribution, by providing the statistics required by the report form under this Article of the Convention (Title VI).

[The Government is asked to report in detail in 2000.]