Afore Withdrawals Soar; Authorities Warn About Consequences
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Afore Withdrawals Soar; Authorities Warn About Consequences

Photo by:   Josh Appel, Unsplash
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By MBN Staff | MBN staff - Thu, 02/11/2021 - 10:34

In January, there was an outflow of MX$1.639 billion (US$82 million) in pension funds, known as Afores, due to partial unemployment withdrawals, the National Commission of the Retirement Savings System (CONSAR) announced this week. This figure marks the highest amount recorded in one month since 2005. The commission said that last month, 142,257 IMSS-registered workers withdrew an average of MX$11,521 (US$577) to cope with unemployment, an increase of 7.6 against 2020 when the average was MX$10,702 (US$536).

Despite this record figure, withdrawals have been on a downward trend for the third month in a row. The worst month was October when MX$2.095 billion (US$10 million) were withdrawn. Last year, President Andrés Manuel López Obrador's political party, MORENA, proposed that people who were laid off could immediately withdraw up to 10 percent of their Afore savings. Currently, to withdraw resources due to unemployment from pension funds, it is necessary to have been unemployed for more than 46 days. Furthermore, the money can only be claimed once every five years.

Abraham Vela, President of CONSAR, warned about the possible consequences of withdrawing money from pension funds. Vela referred to the case of Peru and Chile, countries where an agreement was reached to allow anyone with or without a job to withdraw 10 percent of their savings. “Declining savings in Chile and Peru have led the authorities in those countries to consider a five-year increase in the retirement age and higher worker contributions to partially compensate these withdrawals,” he said. 

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Photo by:   Josh Appel, Unsplash

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