Mexico: a PRI-PRD accord on pensions

Local politicians – especially in Mexico City – have voiced concern that Peña Nieto’s draft Universal Pension Law seemingly requires them to end their own programmes of assistance to seniors. See, for example, this strongly worded article (in Spanish) by Asa Cristina Laurell, co-architect of Mexico City’s universal pension:  “El embate contra la pensión universal ciudadana en México“, Sin Permiso, 13 October 2013.

It is thus good news that members of Congress from the ruling PRI (Partido Revolucionario Institucional), meeting with their counterparts from the opposition PRD (Partido de la Revolución Democrática), yesterday (15 October) agreed to five modifications of President Enrique Peña Nieto’s reform proposal. The first modification – a key one – is that the Universal Pension Law will not affect similar programmes of state and local governments, including – specifically – the universal pension of the Federal District (Mexico City).

For the record, below (in Spanish) is the relevant part of the Press Release issued yesterday by the Finance Secretary, Dr Luis Videgaray Caso. (Mexico follows the US custom of referring to government ministers as ‘secretaries’.) Perhaps the US Congress could learn something from this example of political co-operation in Mexico’s Congress.

It is now clear that all residents of Mexico City aged 68 and older will continue to receive a monthly pension equal to 15 minimum daily salaries (currently 971.40 pesos, about 75 US dollars). But the federal ‘universal’ pension will have a pension test and an income test, so it is not clear whether recipients of a local pension will be allowed to ‘double dip’, with continued access to the federal pension. The pension test currently in effect excludes flat pensions that are residence-based (independent of past earnings). Will that rule continue? The draft law is silent on this point, as is the agreed modification of the law. Also, the maximum income permitted per month is 15 minimum daily salaries. Will Mexico City’s universal pension, equal precisely to this amount, count as part of income? If it does, most if not all recipients of Mexico City’s universal pensions will fail to qualify for a federal ‘universal’ pension, even if the Mexico City pension continues to be excluded from the pension test.

Questions remain. My fear is that we will not have answers until the draft legislation becomes law and regulations are drawn up. At that time, it will be too late to complain.

El Secretario de Hacienda y Crédito Público, Dr. Luis Videgaray Caso, anunció el acuerdo alcanzado entre el Gobierno de la República, el Gobierno del Distrito Federal y los grupos parlamentarios de los partidos Revolucionario Institucional y de la Revolución Democrática, para impulsar, con base en el diálogo y la formación de consensos, cinco puntos sustantivos en la aprobación del Paquete Económico para 2014. ….

El acuerdo alcanzado comprende:

1. La Pensión Universal propuesta por el Presidente de la República como parte esencial de la Reforma Hacendaria y de Seguridad Social no afectará los programas de las entidades federativas, incluyendo el programa de adultos mayores que tiene en práctica el Gobierno del D.F.

[4 unrelated points follow]

Secretaría de Hacienda y Crédito Público de México, “Anuncia el Secretario de Hacienda Cinco Puntos de Acuerdo para Avanzar en la Aprobación del Paquete Económico 2014“, Comunicado de Prensa, 15 October 2013.

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