The new Law of the Mexican Institute of Social Security is set to enter into force on July 1 1997, from which date employees will be entitled to have their pension funds managed by 'retirement fund administrators' (administradores de fondos para el retiro or 'afores'), which can be private bodies. Funds are at present managed by the Social Security Institute.
The new law was originally set to come into force on January 1 1997. However, this was postponed by presidential decree to allow more time for a new regulatory framework to be established under the Saving Systems Law enacted on May 23 1996. The principal regulatory body will be the National Commission for the Savings System (Comisión Nacional del Sistema de Ahorro or CONSAR).
The afores must be financial entities which specialize in managing individual retirement accounts and in investing individual account funds in sub-accounts created in accordance with the new laws. To date 16 afores have been authorized by CONSAR. In general, foreign investment in an afore cannot exceed 49%.
Adrian Zubikarai A, Leonel Aguilera and John E Rogers
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