By Antonio Valencia, Principal Wealth at Mercer
On March 14, the Senate approved a reform to the Federal Labor Law to indicate in the list of employer prohibitions (article 133, section I Bis), refusing to hire older people into its workforce and establishes, for companies with more than 20 workers, a minimum quota of 5% of the total workforce in favor of those with at least 60 years of age.
It is also indicated as a new employer obligation (article 132, section XV Bis), to implement the necessary actions and programs with the purpose of promote jobs and paid jobs for this sectorin order to be able to hire them according to their trade, profession or ability without more restriction than their physical or mental limitation declared by the medical or legal authority.
The reform project is now in the Chamber of Deputies and if approved there, it will be sent to the Executive for publication in the Official Gazette of the Federation (DOF) and entry into force. Population aging is catching up with us and presents us with new challenges:
- How to take advantage of the value of the experience of older employees?
- How to increase the exchange of knowledge between generations?
- How to optimally manage talent close to retirement?
- How to prepare the company for a new demographic structure?
The increase in the elderly population in Mexico is growing at a faster rate than the increase in the total population, at the same time we are in a period of uncertain economic growth and inflationary pressure. These factors have repercussions in all areas of our society: how we conceive and live our lives, how we finance them, how we make decisions, how we will work and what we will need in the future.
The accelerated development of technology, digitization and automation has caused a displacement of older adults from jobs and the training deficit makes it more difficult for them to find a job. It is vital to help them stay in the labor market for longer and to reduce financial dependency in old age.
Both personally and in signatures, The last thing on the agenda of priorities are the issues related to retirement.no. Every day that something is not done to attend to this planning, the most valuable asset is lost: starting young.
In an organization, optimally managing the talent that is approaching this stage will be more complex if they already have elderly staff for whom they do not have a succession plan or career development plans. To the extent that corporations can anticipate these exit processes, it is possible to identify needs in organizational structures for skills and knowledge for the correct transition.
Within the labor market there is a need to achieve financial well-being, not only in the short term but also in the medium and long term. Demand for deferred benefit programs (private pension plans, stock purchase plans, long-term incentives) has increased as part of the total compensation offer and strategy for retaining and attracting talent.
In the country, There are just under 3,000 companies that provide their employees with the financial and tax benefits of a private pension plan.. The possible changes in the Federal Labor Law will reconsider the philosophy and operation of these compensation schemes that provide benefits at retirement age.
1. Redefine the normal and early retirement ages that are established in the text of the private pension plan. In general, consider the normal retirement age as 65 years with at least five years of seniority.
2. If the plan does not allow retirement after the normal retirement age, it will be important to contemplate the adjustment so that employees are not forced to leave the company and can stay longer.
3. Contemplate the new flexible retirement trends in pension schemes. Employees close to this stage have the option of gradually reducing their workload while carrying out the succession of their responsibilities.
4. In some organizations it may be ideal to discourage early retirement in order to retain key talent longer.
5.- Take into account the fiscal stimulus that the Income Tax Law provides to taxpayers who hire personnel aged 65 and over (article 186).
The changes derived from aging in the workforce not only have repercussions on pension plans, it is also important to review the conditions and exclusions that are stipulated in life insurance, medical expenses and funeral expenses in relation to the age limits for contracting and renewal of policies. Of course, keeping a watch on the cost of premiums derived from a higher loss rate associated with age.
Although organizations have made strides in gender diversity and inclusion, many have not yet paid much attention to this important and growing segment: employees aged 60 and over.
Editor’s Note: This text belongs to our Opinion section and reflects only the author’s vision, not necessarily the High Level point of view.
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