How Do Management Fees Affect Retirement Wealth Under Mexico's Personal Retirement Accounts System?

Published in: Latin American Policy, v. 5, no. 2, Dec. 2014, p. 331-350

Posted on RAND.org on February 16, 2015

by Emma Aguila, Michael D. Hurd, Susann Rohwedder

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In 1997, Mexico transformed its pay-as-you-go social security system to a fully funded system with personal retirement accounts, including management fees. This article examines changes in retirement wealth resulting from this new system. It shows that management fees have drained a significant proportion of individuals' retirement wealth and have increased the number of persons claiming a government-subsidized minimum pension, particularly from the time the system was introduced in 1997 until adjustment to management fees in 2008. Since 2008, retirement wealth accumulation has been similar to that of the previous system.

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