When we are young, we can earn money to live a good life, but for most people, the tension is, what would they do once they reach a certain age and their body does not allow them to work anymore, what if they do not have enough savings to live a good life after retirement. This is when pension comes into function.
A pension is basically a form of income that a person receives every month after retirement. Generally, pensions are given by either government or the previous employer. Moreover, a person can also build a pension for themself by depositing some money into their pension fund while they are young and have a decent income.
In this article, we are going to discuss the pension system of Mexico. We will also be discussing an innovative initiative by CONSAR, Telecomm, and 7/11 Retail Stores called Would You Like a Pension with That. So without any further delay, let’s get to know more about this.
What is a Pension?
Let’s start with the basics. A pension is a form of retirement. While you are an employee or working for any particular company for a long time, you are supposed to contribute some part of your income for your retirement benefit. This money is generally deposited with a pension regulator which also provides a return. So with time, you also get the interest on the money that you deposit.
When you take retirement, you get this money back in the form of monthly income. Most companies and government departments offer pensions for their employees. But you can also select your own pension plan with the private or government pension regulating service of your choice.
If you do not have enough savings while taking retirement, a pension can be a big help for you. This is basically the fruit of all those years of hard work that you can enjoy after your retirement without any stress of earning money to survive.
Pension System in Mexico: An Overview
In Mexico, somewhat 50% of the people are connected to the pension system. Basically, people who have done even a small job for a particular period of time receive a pension. There are a total of 11 pension regulators in Mexico, which are connected to the center.
All the information regarding the pension fund administrators, the number and details of people who get pensions, the amount of money that is paid off as pension, everything is noted down in the national database known as Processor.
As per the central pension system of Mexico, after depositing money in the pension fund, the depositor receives a 10% return every 3 months. This ultimately results in a doubling of the total funds in approximately 20 years. This return rate of 10% is much higher that the amount of interest you will receive on a normal savings account in Mexico. So if you live in Mexico, you can definitely sign up for their central pension system.
Challenges Faced by the Mexican Pension System
Even though the pension system of Mexico is pretty good, it still faces some challenges, due to which, all the people are not connected to the pension system. Here is a list of some of the challenges faced by the Mexican Pension System.
1. Lack of Awareness
The first and major problem with the pension system of Mexico is its awareness. Many people are not even aware of the fact that they can get a pension after retirement. To work on this, the Mexican government can conduct awareness campaigns and tell people about the concept of the pension and its benefits.
2. Complex System
The next challenge faced by the pension system of Mexico is its complexity. There are a total of 11 private pension administrators, which work with the center. So it can be really confusing for people to make decisions regarding which pension administrator is good for them and how one is different from the other.
3. Lack of Participation and Enrollment
Another challenge is the lack of participation and enrollment. Even people who are aware of the pension system, only half of them participate in pension-related programs, and then only 50% of them enroll in them. This issue can only be resolved when the Mexican government tries to spread awareness about the perks of pensions. Then only it will drive people to enroll for pension.
Would You Like a Pension With That: A New Initiative
Now you are well aware of the challenges of the pension system of Mexico. To deal with these challenges, CONSAR, Telecomm, and 7/11 Retail Stores came up with an innovative initiative that asks you to add money to your retirement funds whenever you shop for something from the 7/11 Retail Stores.
In Would You Like a Pension With That initiative, whenever you shop from a 7/11 Retail Store and go for billing, they ask you if you also want to add some money to your pension fund. If you are not aware of the pension plan, they will also educate you about it.
The best part is, there is no minimum or maximum limit on the deposit. This means that you can deposit as low as $3.00 in your retirement funds. This way, you will be able to increase your retirement benefit, every time you go out shopping at 7/11 Retail Stores.
However, to make this better, they can also allow mobile money transfers for financial inclusion, through which, people would be able to add money to their retirement fund with mobile money as well.
The Vision of CONSAR
CONSAR is one of the pension regulators of the Mexican pension system. With the “Would You Like a Pension With That program,” they aim to increase the enrollment of people for the pension. They believe that this will allow the Mexican population to have more than the usual retirement funds. This is a very creative way to spread awareness about pensions and their benefits. All in all, this innovation has helped in the financial inclusion movement.
FAQs: Frequently Asked Question
Q1. How do I choose a good pension?
In order to choose the best pension plan, you will need to compare all the available pension plans. You can compare things like the return the pension plan is offering, how much money you need to deposit every month, how long you will receive the pension, etc.
Along with this, remember “the earlier, the better”. So take up a pension plan as soon as possible. If you start depositing money in your pension plan from the very start, it will allow you to have enough money to live a good life when you retire.
Q2. Why do I need a pension?
You need a pension so that you can have financial stability after retirement. After reaching a certain age, it will become impossible for you to work and earn money. This is when a pension will help you. With the help of a pension, you will keep getting a monthly income after your retirement.
Q3. What are the benefits of a pension?
Here are some of the benefits of a pension:
- You get an income after retirement.
- It helps you in getting tax efficiency.
- Helps you in getting loans after retirement.
- You do not have to stress about your retirement life.
- It stops you from wasting your money on unnecessary things as you can save money for your future.
All in all, in order to increase the participation and enrollment of people in the pension system, the government needs to spread awareness regarding the advantages this plan offers. Moreover, Would You Like a Pension with That, is a very good way to help people in increasing their retirement funds.
- Jonas Taylor is a financial expert and experienced writer with a focus on finance news, accounting software, and related topics. He has a talent for explaining complex financial concepts in an accessible way and has published high-quality content in various publications. He is dedicated to delivering valuable information to readers, staying up-to-date with financial news and trends, and sharing his expertise with others.
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