The draft “Universal Pension Law” that Enrique Peña Nieto, president of Mexico, sent to Congress in September was far from universal. It added an income test, and apparently (the text was not clear) tightened the pension test to include noncontributory pensions that Mexico City and several state governments provide to their seniors. Despite initial opposition, especially from the left-leaning PRD (Partido de la Revolución Democrática), two weeks ago the lower house passed the bill with almost unanimous approval. The three main political parties supported the legislation, with 417 votes in favour, 19 against, and three abstentions. Congress on 28 October delivered the draft legislation to the Senate, where it is expected to be approved.
The president’s draft legislation gained wide support thanks to changes made in response to criticism. SEDESOL, the government ministry that administers the social pension scheme, announced on November 3rd that rules will not change in 2014. All 5.65 million Mexican residents aged 65 and older, without access to an earnings-related pension, will have the right to receive monthly benefits of 525 pesos (40 US dollars), paid in bimonthly installments The feared targeting of the poor, and exclusion of all who are receiving another noncontributory pension, will not happen. Mexico’s social pension will continue to be a Universal Minimum Pension in theory. Very soon it will become universal in practice.
For me, the most exciting part of the press release was the news that 5.1 million seniors at this very moment are receiving a bimonthly benefit for November and December. This represents 90% of the target population of 5.65 million residents 65 years of age and older (+65 is the new name for the federal social pension). This surpasses the goal of 4.4 million registrations that SEDESOL had set for itself for 2013. SEDESOL now hopes to reach a goal of 5.4 million registered pensioners by 31 December 2013. These 300,000 additional registrants will, however, receive their first bimonthly benefit only in January of 2014.
The increasing scope of social pensions in Mexico has increased rapidly, especially during 2012 and 2013. Until January of 2012, the programme was universal for those aged 70 and older, but restricted geographically to rural communities. The estimated target population was 2.01m in 2011; the number of beneficiaries was a bit larger – 2.15m for the last bimonthly payment of 2011. In 2012 the programme was extended to urban areas of the country, but a pension test was added. The targeted population increased by 75%, to 3.5 million. The actual number of beneficiaries at the end of 2012 was 3.06 million, 13% below the targeted number.
In 2013 the new government kept all the rules of the previous programme intact, but increased the pension from 500 to 525 pesos and lowered the age of eligibility to 65 years. The targeted population mushroomed again, to 5.65 million. The first SEDESOL quarterly report for 2013 was distributed very late, and so far no further quarterly reports have been released. The first and only quarterly report stated that the number of beneficiaries of social pensions had increased from 3.057 million at the end of 2012 to 3.142 million in March 2013. This is not very impressive. Rounding the numbers, beneficiaries were stagnant at 3.1 million, despite the reduced age of eligibility. To my delight, I learned that this month 5.1 million seniors are collecting social pensions. This surpasses all expectations.
Below is a chart (figure 1) from a draft essay that I am preparing on social pensions in Mexico. It shows that an estimated 27% of all Mexicans aged 65 and older are currently receiving earnings-related pensions, most through social security, from formal employment in the private sector. But the group includes also those who receive a pension from government employment, either in the civil service or in government-owned firms such as PEMEX, the oil giant. Some of the 27% (mostly women) claim benefits based on employment records of a deceased spouse. The fascinating part of the graph is that two-thirds of the 7.74 million Mexicans older than 65 have access to noncontributory, social pensions. Only 7% are left without pensions, and this coverage gap will close very quickly if SEDESOL continues to register new applicants at its current pace. This chart is impressive. What is not impressive is the low level of the social pension, but this problem can wait until every senior in the country has access to at least a small pension.
NB: the table in the source is table 18. Somehow the ’18′ disappeared during copy and paste.
A second chart (figure 2) that illustrates what the pension scene in Mexico looked like 13 years ago, when social pensions did not exist. Only 1 in 5 seniors aged 65 and older received a pension at the beginning of the millennium. The other four for the most part lived in extreme poverty, with little or no help from government. Some of the state governments supplied a little help in the form of charity for the destitute. This help often took the form of occasional food baskets (especially at the end of the year, or during elections), or help with fuel for heating and cooking.
Hasta la fecha, se han incorporado más de 5 millones 100 mil personas al Programa Pensión para Adultos Mayores, también conocido como +65, quienes reciben ya un apoyo bimestral de 1,050 pesos, informó el subsecretario de Desarrollo Social y Humano de la Secretaría de Desarrollo Social (Sedesol), Ernesto Nemer Álvarez.
Con estas cifras, agregó, la Sedesol avanza en el cumplimiento de la meta fijada desde el inicio de la administración por el presidente Enrique Peña Nieto.
El funcionario federal explicó que la incorporación de beneficiarios al Programa termina en todo el país el 31 de diciembre y se espera llegar a más de 5.4 millones de incorporaciones. ….
“Todos los adultos mayores que no reciben pagos por jubilaciones o pensiones, y que de acuerdo a los registros suman 5.6 millones de personas en el país, van a incorporarse automáticamente a la pensión universal promovida por el presidente Peña Nieto, para que reciban la protección del estado”.
Refirió que los adultos mayores “merecen todo el respeto y consideración, por lo que se modificaron las reglas de operación para que las pruebas de vida se realicen cada cuatro meses, y no en forma mensual, como se venía haciendo”.
Por último señaló que una vez que se aprobó la iniciativa, en los próximos días se publicará el reglamento correspondiente, para que empiece a tener vigencia la Pensión Universal; “mientras tanto, la Sedesol continuará incorporando a los adultos mayores hasta llegar a la meta de 5.6 millones de benefiairios”.
“Protegerá a todos los adultos mayores la pensión universal: Ernesto Nemer“, SEDESOL Comunicado de Prensa 506/031113, México, D.F., 3 Novembere 2013.
Thanks to Charles Knox-Vydmanov for the pointer.