Retirement Funds Administrators ( es, Administradoras de Fondos para el Retiro, abbreviated AFORE) are companies authorized to manage
individual retirement accounts as authorized by the
Ministry of Finance and Public Credit of
Mexico and overseen by Comisión Nacional del Sistema de Ahorro para el Retiro
(CONSAR).
AFORES manage accounts that accumulate contributions by the employer, the
federal government
A federation (also known as a federal state) is a political entity characterized by a union of partially self-governing provinces, states, or other regions under a central federal government (federalism). In a federation, the self-governin ...
and the
employee
Employment is a relationship between two parties regulating the provision of paid labour services. Usually based on a contract, one party, the employer, which might be a corporation, a not-for-profit organization, a co-operative, or any other ...
.
Accounts
Individual retirement accounts contain four separate sub-accounts which are:
*Retirement, lay-off and old age (RCV, "Retiro, Cesantía y Vejez" in
Spanish). This sub-account contains funds contributed by the employer, federal government and employee.
**The employer contributes with an equivalent to 2% of the employee's salary to ''retirement'' and 3.15% of the salary to the ''lay-off and old age'' account. Contributions take place bimonthly.
**The government contributes 0.225% of the salary to the ''lay-off and old age'' account bimonthly and an equivalent of 5.5% of
minimum wage
A minimum wage is the lowest remuneration that employers can legally pay their employees—the price floor below which employees may not sell their labor. Most countries had introduced minimum wage legislation by the end of the 20th century. Bec ...
in the
Federal District.
**The employee contributes with 1.125% of the salary bimonthly.
*Voluntary contributions. An employee may also contribute extra funds voluntarily. Additional contributions may be done directly with the Afore or automatically deducted from the employee's salary.
*Housing. This is a sub-account into which employers contribute an equivalent of five percent of the employee's salary. Funds are deposited with the
INFONAVIT
The Institute of the National Housing Fund for Workers (Spanish: ''Instituto del Fondo Nacional de la Vivienda para los Trabajadores''; ''INFONAVIT'') is the Mexican federal institute for worker's housing, founded in 1972, and located at Barranca ...
through the
Fondo Nacional de la Vivienda
Fondo (german: Pfund; Nones: ''Fón'') is a ''comune'' (municipality) in Trentino in the northern Italian region Trentino-Alto Adige/Südtirol, located about north of Trento, precisely at the northern limit of the Val di Non.
Fondo borders the ...
("National Housing Fund") and the Afore only registers contributions and balances.
*Complementary contributions. This sub-account will contain additional funds contributed by the employer or the employee to increase the pension balance. These funds can only be withdrawn after retirement.
Withdrawals
Withdrawals of funds from these accounts is possible under certain situations such as:
*
Old age
Old age refers to ages nearing or surpassing the life expectancy of human beings, and is thus the end of the human life cycle. Terms and euphemisms for people at this age include old people, the elderly (worldwide usage), OAPs (British usage ...
. Funds can be withdrawn on or after reaching the age of 65.
*
Layoff
A layoff or downsizing is the temporary suspension or permanent termination of employment of an employee or, more commonly, a group of employees (collective layoff) for business reasons, such as personnel management or downsizing (reducing the ...
s. A maximum of 10% of the funds can be withdrawn on or after the day 46 of being unemployed. This option can be exercised every five years.
*
Marriage. A maximum of 30 days of minimum wage in the Federal District can be withdrawn for wedding expenses.
*Home purchase. The funds in the ''housing'' sub-account can be withdrawn to buy a house. If these funds are not used before retirement they can be withdrawn then.
*
Death
*
Accidents and
illnesses leading to
disability
See also
*
Mexico Pension Plan
External links
AFORES{{in lang, es at the
(Spanish: "Comisión Nacional para la Protección y Defensa de los Usuarios de Servicios Financieros", abbreviated "Condusef").
Retirement
Financial services companies of Mexico