Observation (CEACR) - adopted 2002, published 91st ILC session (2003)

Social Security (Minimum Standards) Convention, 1952 (No. 102) - Mexico (Ratification: 1961)

The Committee notes with interest the particularly detailed information, including statistical data, provided by the Government in reply to its previous comments made following the coming into force in 1997 of the new legislation, which associates the private sector with the achievement of the objectives pursued by the social security system. It also notes the observations made by the Confederation of Industrial Chambers of the United States of Mexico (CONCAMIN) on the application of the Convention, which were transmitted by the Government with its report.

The Committee requests the Government to provide further information on the following points.

Part II (Medical care). In its previous comments, the Committee noted that, in accordance with section 89 of the Social Security Act, the Mexican Social Security Institute (IMSS) may provide the medical assistance for which it is responsible according to the three following procedures: (I) directly through its own personnel and facilities; (II) indirectly, by means of agreements with other public or private providers of care; or (III) indirectly, through the conclusion of agreements with enterprises with their own medical services. In its report, the Government indicates that the IMSS through this procedure transfers responsibility for the provision of care to those entitled to it to another legal entity, which provides care under the same conditions as the IMSS. This transfer is an instrument allowing the IMSS to provide care to insured persons where it has no adequate infrastructure. In the above manner, the IMSS gives full effect to section 89 of the Social Security Act and consequently to the Convention. Section 89 above is intended to make available to workers flexible insurance schemes and thereby provide the majority of the persons protected with health-care coverage. The Committee notes this information. It also notes the amounts charged by the above services, the number of agreements and contracts concluded with service providers and the reimbursement agreements, as well as the number and principal characteristics (sex, sector of activity, geographical distribution, income levels, etc.) of the insured persons covered by such transfers. The Committee requests the Government to provide copies of agreements for the transfer of responsibility for the provision of services concluded with service providers (care providers in the private sector), as well as copies of reimbursement agreements and agreements for the provision of care concluded with enterprises with their own medical services and with the other institutions referred to in the report.

Part V (Old-age benefit), Articles 28, 29 and 30 of the Convention. 1. In its previous comments, the Committee noted that, for persons who fulfil the qualifying conditions for an old-age pension as set out in the legislation, the level of the pension is not determined in advance, but depends on the capital accumulated in the individual accounts of workers, and particularly the return obtained on such capital, which has to be entrusted to the management of a retirement fund administration company (AFORE) selected by the worker. However, under the terms of section 170 of the Social Security Act, the State guarantees workers who fulfil the age conditions and the qualifying periods set out in section 162 of the Social Security Act the provision of a "guaranteed pension", the amount of which is equivalent to the general minimum wage for the Federal District. In this respect, the Committee notes that the standard beneficiary is determined on the basis of Article 66, paragraph 5, of the Convention. It requests the Government to provide the statistical data requested in the report form approved by the Governing Body under Article 66 of the Convention, Titles I and III.

2. (a) The Committee notes the detailed information provided by the Government in its report on the various commissions charged by the retirement fund administration companies (AFORES) and by insurance companies. It notes that the accumulated commissions charged by AFORES, both on contributions and on capital, would amount to 11.2 per cent of the capital accumulated over 25 years by a worker receiving the average wage. It requests the Government to indicate the total average percentage of the commissions charged, including the average applied to the accumulated capital and the average applied to contributions, in relation to the average wage of a standard man and woman worker. It also requests it to indicate whether, in determining the amount of commissions, account has been taken, in accordance with Article 71, paragraph 1, of the Convention, of their impact on persons of small means. It requests the Government to provide information disaggregated by sex on the amount of the commissions charged by the AFORES ("programmed retirements") and insurance companies (lifetime annuities) during the passive period, that is from the time that the pension is paid (lifetime annuity) periodically on the pension received (lifetime annuity or "programmed retirement") or on the capital accumulated by the pensioner ("programmed retirement").

(b) In reply to the Committee’s previous comments on the methods used for the calculation of pensions, the Government indicates that in the case of invalidity, life and employment injury insurance, the insurance companies provide benefits to both men and women workers in accordance with the amounts established in the Social Security Act, based on the wage. The basic capital transferred to the insurance company for the provision of a lifetime annuity is calculated in accordance with mortality tables for invalids by age and by sex. The Committee notes this information. In view of the fact that employment injury insurance is financed wholly by the employer, it requests the Government to indicate whether the capital amount transferred to the insurance companies includes the savings accumulated by the worker at the date on which the injury occurred (see the comments made under Article 71, paragraph 2, of the Convention).

3. In its previous comments, the Committee drew the Government’s attention to Article 29, paragraph 2(a), of the Convention, which provides that a reduced old-age benefit shall be secured at least to a person protected who has completed, prior to the contingency, a qualifying period of 15 years of contribution or employment. In its report, the Government reiterates that insured persons who do not meet the qualifying condition of 1,250 weeks of contributions set out in sections 154 and 162 of the Social Security Act at the time that they become entitled to old-age benefits, may either withdraw the balance of their individual account in a single transaction, or continue to pay contributions to complete the missing weeks in order to qualify for a pension. Where the insured person has paid contributions for 750 weeks, she or he is entitled to benefits in kind under the sickness and maternity insurance scheme. Workers who have paid at least one contribution to the former pay-as-you-go system maintain the rights provided for under the repealed Act. Insured persons registered prior to the coming into force of the new Social Security Act can opt to be covered either by the pay-as-you-go scheme or the fully funded scheme. The seniority requirements for entitlement to an old-age pension or a pension for termination of employment at an advanced age for all transition workers is 500 weeks of contribution, which is a shorter period than that envisaged in Article 29, paragraph 2, of the Convention. The Committee notes this information. However, it is bound to emphasize that, with regard to the fully funded scheme, neither the possibilities offered to insured persons under section 162 of the Social Security Act, nor the right to benefits in kind under sickness and maternity insurance, which is furthermore also granted to all pensioners under the terms of section 84 of the Act, can be considered sufficient to give effect to Article 29, paragraph 2, of the Convention. In these conditions, it hopes that the Government will be able to re-examine the situation and indicate the measures which have been taken or are envisaged to secure a reduced periodical old-age benefit to a person protected who has completed, prior to the contingency, a qualifying period of 15 years of contribution or employment, in accordance with the provisions of the Convention on this point.

4. Part XI (Standards to be complied with by periodical payments), Articles 65, paragraph 10, and 66, paragraph 8 (Review of benefits). In its previous comments, the Committee noted the information provided by the Government on fluctuations in the cost-of-living index, earnings and benefits, which showed that, with the exception of survivors’ benefit, effect was given to these provisions of the Convention requiring the adjustment of long-term benefits for all contingencies. However, according to the statistics provided, the increase in survivors’ benefit between May 1997 and June 2000 is far from following that of the general level of earnings and the cost of living since, according to the statistics provided by the Government, the increase is only 34.72 per cent for the average increase per beneficiary and 22.39 per cent for the increase in benefits for a standard beneficiary. The Committee notes the information provided by the Government in its last report to the effect that the increase in survivors’ benefit appears to meet the requirements of the Convention. However, it wishes to draw the Government’s attention to the fact that the statistical information provided in its last report does not coincide for the same period with the data provided in the report covering the period 1997-2000. The Committee would therefore be grateful if the Government would clarify this situation and provide up-to-date information in this respect.

Part XIII (Common provisions). 1. Financing (Article 71). The Committee notes the information concerning the financing of benefits. It requests the Government to indicate the manner in which effect is given to Article 71, paragraph 2, of the Convention in the case of employment injury benefits in so far as the capital accumulated in the individual accounts of workers contributes to the financing of such benefits, under the terms of sections 58 and 64 of the Social Security Act.

2. Administration and control of the social security system (Articles 71, paragraph 3, and 72, paragraph 1). The Committee notes the information provided by the Government in its report. It notes with interest the Financial and Actuarial Report of the Mexican Institute, approved by the General Assembly of the IMSS on 30 August 2000. However, it notes that there is no overall actuarial report for the whole system. In view of the fact that the State is responsible for the general functioning of the system as a whole, the Committee emphasizes the need to carry out an overall actuarial evaluation of the whole system. In order to give full effect to Article 71, paragraph 3, the above evaluation must cover the various pensions schemes, including and recapitulating at a specific evaluation date the fixed and contingent liabilities, as well as all the debts and commitments of the State deriving from the former and the new social security systems, encompassing the responsibilities of the IMSS, the INFONAVIT and the SAR in the financing and the liabilities and all items of expenditure, including collection, administration, supervision and control. The Committee considers that the viability and sustainability of the system depend on a detailed analysis of the real and foreseeable development of the system as a whole. Indeed, this is of the very essence in an actuarial study. Only a global actuarial evaluation of the system will make it possible to estimate the contingent deficits to be underwritten by the State and to make the corresponding forecasts.

3. Participation of persons protected in the management of schemes (Article 72, paragraph 1). In reply to the Committee’s comments, the Government indicates that it has entrusted the administration of AFORES and Companies Specializing in the Investment of Retirement Funds (SIEFORES) to institutions regulated by a public body, such as the National Commission for the Savings System (CONSAR). It is therefore the Government’s opinion that paragraph 1 of Article 71 of the Convention is not applicable. The Government accordingly considers that sections 29 and 49 of the Retirement Savings Act of 23 May 1996 give full effect to these Articles of the Convention. The Committee notes this statement. It wishes to point out that section 2 of the above Act does not appear to envisage the administration of individual accounts among the functions of CONSAR. This function is attributed, under section 18 of the Act, to the AFORES. In view of the fact that sections 29 and 49 of the Act do not specify that the independent advisers represent the interests of the workers, the Committee requests the Government to indicate the measures that it intends to adopt to allow the participation of the persons protected in the management of AFORES and of SIEFORES, as well as of insurance companies.