On the night of Thursday the 19th, the National Retirement Savings System Commission (Consar), the regulatory entity of the national pension system, surprised the market with the announcement of an unprecedented measure in this market so far.
The Consar reported that, given the high volatility that has prevailed in the financial market, a situation that has caused historical losses in the Afores, as of last December 16, said authority suspended the changes of Aforethis type of movement is known in the middle as “transfers”.
Given the adverse market conditions, Consar took measures to suspend transfers for a period of three months in order to safeguard workers’ savings”, he reported.
This means that the transfers of worker accounts between the Afores are suspended until March 16, taking into account the start date of the measure, which, as we pointed out, was last December 16.
2022, the worst year of losses in the history of the Afores
It is important to mention that last year was a period of strong losses for the retirement savings of Mexican workers. Consar figures indicate that, at the end of 2022, the Afores closed with losses of 215 thousand 477 million pesoswith which, we repeat, it is the worst year in the reduction of resources since the Afores operated in the country, that is, since July 1997, almost 26 years ago.
The same official data indicates that, during the past year, more than 3 million workers changed administrators, exercised their right to transfer. Analysts and the authority itself warned on various occasions throughout the period that it was the worst time to make a transfer, because, if the Afore change was made, then the capital losses recorded in the workers’ accounts would become losses. affecting your assets. In this regard, we consign a small analysis and reflections on what this measure means and its benefit, harm or both.
Positive measure, in the first instance
The Consar has the legal authority to take measures that preserve the patrimony of the workers before adverse events of the market or foreign to it. Although it is worth noting that handicaps are a kind of “economic-financial collateral damage”
Property damage, a serious risk
The possibility that the workers’ savings accounts would continue to be affected, that is, initial losses and eventual losses if the worker made the decision to switch from Afore, is very real. The financial markets and the economy in general are going through complex times and it seems that what is coming in the coming months is not favorable; This will result in strong financial volatility, with an unquestionable impact on retirement savings accounts. In this sense, we hope that the 3-month term does not have to be extended; if financial volatility continues, it is highly probable.
Good intention, but the problem is very deep
Surely the Consar and its spokesmen will tell us that the measure has the objective of protecting the patrimony of the workers. We do not doubt the good intentions of those who currently regulate the Mexican pension market. It is the obligation of the Consar to protect the assets of the workers against risks such as the enormous financial volatility, which is not the fault of the Afores. But the problem is much deeper, we explain it in the next point.
And financial education like Denmark, when?
Unfortunately, Mexico is still light years behind developed countries in terms of financial education. It is, in fact, a dream that many present generations will surely not see fulfilled: that our country be a leader in financial education. This matter is undoubtedly the direct responsibility of Consar, and let alone the Afores.
Whoever writes this has criticized the union for years, over and over again, because they have always considered that the effort made in this area (which is laudable and truly significant) has been, is, and seems to be totally insufficient. I have said, for example, that in this matter it is as if we were running in a car at 10 kilometers per hour, when the needs to reach the goal should force us to run 10 times more. Financial education is pending, and it will continue to be so because there are not enough efforts, the union must allocate many more resources, today is a time of handicaps and they pay for their carelessness with the freezing of transfers. There is no greater financial protection than teaching those who do not know, educating financially from the cradle if possible to those who will have the future of the country in their hands, that is, truly empowering the worker. If we had done this decisively and massively almost 26 years ago when the Afores were born, or even much earlier, today we would have covered an important part of the journey and the workers would surely make better decisions. Financial paternalism is good, but in excess, like everything else, it hurts.
the big opportunity
We have a new opportunity, three months are very short without a doubt, but will they be so few that they will not be enough for the union to become fully aware, once and for all, and understand that it must allocate many more resources to financial education? whatThey do not have enough 90 days to design an initial massive financial education plan for the coming years? The authority could do something more to force the Afores, or else to act together and integrate financial education once and for all, as a totally compulsory subject from early education, which forms part of the subjects that students must take and approve yes or yes, such as mathematics, Spanish, etc.
These three months will go by fastHopefully, in that period of time, some measures will be taken to empower the millions of workers and that with the passage of time the “assets” or whatever they are called, know that they are in front of people who, for the most part, have a certain degree of financial literacy.
The measure of freezing or suspending transfers is to some extent correct, but at the same time it seems like a desperate decision given the impossibility of doing anything else in a market that has many deficienciesThe main one being the very low level of financial knowledge of the vast majority of those who save for retirement. In addition, I hope this measure is not used as a political flag, arguing among other things that we are before a responsible authority and a government that cares about the workers because “it is not like before.” The political use of this type of actions is something that in these times and in this country happens one day and another as well. And the workers?, and the financial education?
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