Afore Transfers Suspended Until March 2023
The National Commission of the Retirement Savings System (CONSAR) decided to suspend pension fund (afores) transfers until mid-March 2023, due to the consistent losses in 2022.
According to CONSAR, transfers were paused on Dec. 16, 2022, and will be possible once again on March 16, 2023. During this period, afores can attract accounts, receive documents and begin affiliation processes, which will be put on standby until March 16. "Due to adverse market conditions, CONSAR took measures to suspend transfers for a period of three months in order to safeguard workers' savings," said the commission.
This is the first time in the history of afores that CONSAR has taken such a measure, reports El Economista. Limiting transfers inhibits individuals from making decisions about their savings, says Moisés Pérez Peñaloza, Director of Retirement and Financial Well-Being Latin America, AON. If a worker wants to transfer, the change will not take place until March.
In Mexico, only 25 percent of the adult population has some type of formal financial education, according to INEGI’s National Financial Inclusion Survey (ENIF). An individual’s level of financial education is closely tied to personal factors, according to Deloitte: “A person with a higher academic degree and higher salary is more likely to have more knowledge about the various financial products, while a person with lower education and income levels will have less knowledge on the subject.”
Changing afores during difficult times causes financial losses because the assets have to be sold at a low price, creating a real loss for the worker. In 2022, CONSAR and the Mexican Association of Afores called for workers not to carry out actions that affect their savings, such as transferring their account to another company, withdrawing money due to unemployment or marriage, among others, reports El Economista. However, these movements did not stop and CONSAR decided to suspend transfers for three months.
Withdrawals occur for many reasons, including economic strife. Mexico’s economy had a turbulent 2022 and started 2023 with general annual inflation hitting 7.94%, as previously reported by MBN. The underlying price index, which includes goods and services whose prices are more volatile, registered an increase of 0.44% at a biweekly rate and of 8.45% at annual rate. INEGI explained that the non-core price index suffered a greater increase, growing 0.51% biweekly and 6.44% at an annual rate.