The gender gap in the individual capitalization system of pensions in Mexico

Abstract

In Mexico, since 1997, the traditional public pay-as-you-go defined benefit scheme was replaced by an individual capitalization system operated by private administrators of retirement funds called AFORES. The rules of this system establish equal requirements for both men and women to have access to a pension. Nevertheless, this seeming gender neutrality, in fact, hinders women's opportunities for enjoying a secure and enough pension income during old age. Through the systematization and analysis of documentary and statistical data, this article explores the gender gap generated in the pension system in Mexico. The purpose is making visible the inequalities configured under the individual capitalization system (in the accumulation and decumulation phase) to the detriment of women pension income. For doing this, three pension income gender gap determinant factors are presented and analyzed: salary, life expectancy and contribution density. Results show that the current design of the pension system in Mexico is discriminating for the women workers generations under the individual capitalization system since it is not considering the conditions of inequality in which they participate in the labor market and establish life expectancy as a factor for calculating the amount of pension. Based on the results, and considering international experience, public policy actions are proposed which would contribute to reduce the gender gap in this matter.