Observation (CEACR) - adopted 2010, published 100th ILC session (2011)

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

The Committee took note of the Government’s report received in September 2008 containing a reply to the Committee’s previous comments, in which the Committee has also referred to the Government’s reply of 27 November 2007 to the observations of a number of trade unions (the Trade Union of Workers of the National Autonomous University of Mexico; the National Trade Union of Workers of the Ministry of Agriculture, Livestock, Rural Development, Fisheries and Food; the Single Trade Union of Workers of the Nuclear Industry; the Independent Trade Union of Workers of the Autonomous Metropolitan University; the National Union of Education Workers (14 sections); the Trade Union of the National Council for Culture and the Arts; the Administrative Union of the Autonomous University of San Luis Potosí) in 2007 alleging breaches of the Convention by the new Act on the State Workers’ Social Security and Services Institute (ISSSTE). Further observations on this issue, dated 26 August 2008, were received from the Union of Lawyers of Mexico acting in the name of the Alianza de Tranviarios de Mexico, Single Union of Government Workers of the Federal District (SUTGDF), de la Seccion XVIII (Michoacan) of the National Union of Education Workers (SNTE) y de la Seccion XXII (Oaxaca) del SNTE. The United Trade Union of Government Workers of the Federal District (SUTGDF) has supplied additional observations in the communication dated 27 August 2008. The Committee notes that the trade unions’ allegations contest the application by Mexico of virtually every Article of the Convention. In view of the volume and the detailed nature of these allegations and the fact that the next report of the Government should be a detailed report containing full information on the application of every Article of the Convention according to the report form adopted by the Governing Body, the Committee decided to concentrate its present comments on the main questions, which would help the Government to prepare a fully informative report for the Committee’s examination next year. To conduct such an examination in full knowledge of the situation, the Committee needs the report to enlighten it in particular on the following two issues: on the legal certainty as to the state of the current legislation in view of the constitutionality of the ISSSTE being challenged in the Supreme National Court of Justice, and certainty as to the level and sustainability of benefits provided by the reformed social security system after the previous defined benefit collectively financed  pay-as-you-go scheme was replaced by a defined contribution individual savings account system.

Legal certainty as to the state of the applicable national legislation

According to the information communicated by the trade unions, 85 per cent of the 2.3 million public employees insured by ISSSTE consider that this Act violates their acquired rights and imposes stricter conditions for entitlement to certain benefits. Hence, more than 2 million public workers submitted constitutional complaints (amparos constitucionales) contesting the constitutionality of the Act and of the Regulation on the exercise of the right of option under section Ten of the transitional provisions ((Décimo Transitorio o BONOISSSTE). According to the Law on constitucional complaints (Ley de Amparo), any such complaint has to be resolved in the period of 60 days and suspends during this period the application of the contested provision of the legislation. To deal with the mass of these complaints, the Supreme National Court of Justice (SCNJ) has set up two special tribunals mandated to consider these complaints.

The Committee notes that the Government’s report was received in September 2008 when the Supreme Court had just started to consider these cases and therefore contained no information in this respect. To the extent that the application of the contested provisions of the ISSSTE might have been suspended, the Committee asks the Government to explain the decisions taken by the Supreme Court in these cases and their effect on the application of the ISSSTE Act in law and practice. The Committee further notes that the Supreme Court declared unconstitutional sections 20, 25, 60 final part, 136, 251 and subsection IV of section ten transitional, as well as, in June 2008, the provision on the calculation of pension on the basis of average wage received for the last three years before retirement, which reduced the possibility for public employees to receive a higher pension, and decided instead that the pension should be calculated taking into account only the last year’s wage. The Committee asks the Government to indicate whether there were other decisions of the Supreme Court declaring unconstitutional the provisions of the ISSSTE and to supply the new text of all provisions, which were modified.

Certainty as to the level and sustainability of benefits

In its previous observation, the Committee pointed out that the reform of the ISSSTE made it necessary to conduct an overall actuarial valuation of the entire social security system to ensure the financial equilibrium of the new system and assess estimated level of benefits, in particular the replacement rate of the new scheme. Such actuarial valuation should be comprehensive and, henceforth include all liabilities of the new ISSSTE scheme, and asked the Government to indicate whether such a valuation has been carried out and, if so, to provide the results thereof. The Government’s report of 2008 has not provided the information requested, indicating that the information processing systems of the two social security institutions – ISSSTE and IMSS – are in the process of coordination. In the meantime, the managing board of the ISSSTE has approved the actuarial report for 2008, which concludes that in the period 2008–13 the resources available to the Institute would on average cover only 88 per cent of the total cost of benefits it would have to deliver under the new law. The Committee asks the Government to supply a copy of this report and to indicate measures taken or envisaged by the Government to make up the deficit and ensure the due provision of benefits under the ISSSTE scheme.

Taking into account that the reform of the state workers’ scheme necessitated transfer to the ISSSTE of the social security funds from the general scheme (IMSS), the Committee once again stresses the importance of an actuarial evaluation of the entire social security system, which should cover the various pension schemes recapitulating at a specific evaluation date the fixed and contingent liabilities, as well as all the debts and commitments of the State deriving from the old and the new social security systems. Indeed, only an overall actuarial valuation of the entire system will make it possible to estimate the contingent deficits to be underwritten by the State and to make the corresponding forecasts. The Committee accordingly asks the Government to take the necessary measures to conduct such an actuarial study, as required by Article 71(3) of the Convention.

With regard to the question of the level of benefits, which the Committee has been addressing to the Government in its previous comments under Part XI of the Convention (Standards to be complied with by periodical payments), in the fully funded defined contributions scheme the amount of the pension is not determined in advance but depends on the capital saved in the workers’ personal accounts and on the return thereon. The Committee therefore requests the Government to explain, with reference to the relevant actuarial forecasts, what replacement level the ISSSTE scheme aims to achieve after 30 years of contributions and whether the replacement level of 40 per cent required by the Convention would be attained for the standard beneficiary. If such is the case, The Committee requests information on the standard assumptions of the actuarial in terms of real interest rate, density of contribution that would guarantee the 40 per cent required by the Convention. Also the Committee requests to describe the mechanism of the adjustment of changes in the cost of living and the general level of wages.

Pursuant to section 92 of the ISSSTE Act, for workers meeting the requirements on age and qualifying period laid down in section 89 of the Act, the State provides a “guaranteed pension” in a monthly amount of 3,034.20 pesos. The Government indicated in its report of 2008 that this amount represents the double of the minimum pension level established by the Convention and that the amount of the average pension equalled four minimum wages and was four times higher than the Convention’s minimum. The Committee notes this information with interest. However, it has not found in the Government’s report the statistical information requested in its previous observation under Article 66 of the Convention, to enable the Committee to ascertain whether the minimum amount of the old-age pension attains the percentage prescribed by the Convention. The Committee asks the Government to substantiate the above statements by comparing the amount of the guaranteed pension with the reference wage of an ordinary adult male labourer, as required in the report form under Article 66 of the Convention.

In the general IMSS scheme, under section 170 of the Social Security Act, the State guarantees to workers who fulfil the age conditions and qualifying periods set out in section 162 of the Social Security Act, the provision of a “guaranteed pension”, the amount of which is equal to the general minimum wage for the Federal District. According to the statistics provided previously by the Government, the amount of the minimum guaranteed pension for 2006 attained 42.95 per cent of the wage of an ordinary adult male labourer selected in accordance with the provisions of Article 66 of the Convention. The Committee wishes the Government to explain the difference between the guaranteed pension under the ISSSTE, which, according to the Government, represents the double of the minimum pension level established by the Convention, and the guaranteed pension of the IMSS, which is hardly above this minimum.

The Committee notes in this respect that, according to the trade unions’ observation of 2007, neither the guaranteed pension under section 92 of the ISSSTE, nor the old-age and invalidity pensions under sections 91, 121 and 139 of the ISSSTE ensured the replacement level of 40 per cent required by the Convention. Referring to the Government’s reply to the trade unions’ observation, the Committee observes that in contesting these allegations the Government does not refer to any statistical data and seems to confuse the general minimum wage for the Federal District with the wage of an ordinary adult male labourer, which should be used as the reference wage for measuring the replacement level of the guaranteed pensions. The Committee therefore once again asks the Government in its next detailed report due in 2011 to provide the statistical information requested by the report form under Article 66 of the Convention (Titles I, II and IV). It also asks the Government to indicate whether the guaranteed pension also applies to the pension arising out of death and, if so, under which provisions.

Communications from representative organizations on the application of the Convention. The Committee notes the information transmitted by the Trade Union of Telephone Operators of the Mexican Republic in the communication dated 22 February 2010 concerning the situation of the AVON company workers and the settlement reached with the IMSS, which were the subjects of the Committee’s previous comments. The Committee will examine this communication at its next session together with the comments that the Government would wish to formulate in this respect.