All afore and almost all investment instruments showed capital gains in April, according to Consar (Photo: Pixabay)

The ten main Retirement Fund Administrators (AFORE) operating in Mexico recorded historical capital gains during the first half of 2020, overcoming the volatility of the markets during the health emergency due to COVID-19.

The Afore, according to El Universal, had a cumulative capital gain of over 220 billion of weights During the first half of the year, April being the month where the losses recorded between February 24 and the last days of March began to reverse.

The National Commission of the Retirement Savings System (Consar) revealed that only during the month of June, the resources for the retirement of Mexican workers registered capital gains for 102,677 million pesos.

As of April, they clarified, capital gains have accumulated for up to 350,129 million pesos. On the other hand, they assured that in the last 12 months, the Afores accumulated capital gains of 417,813 million pesos.

« The recovery in the value of workers’ savings was the result of the gradual return to normal that financial markets have been showing, » said Consar.

All the afore and most investment instruments showed capital gains in April, according to Consar. In order of importance, they grew more in investments in equities, M bonds, UDIbonds, FIBERS, corporate debt and government securities.

In 1997, Mexico decided to reform the traditional pay-as-you-go system by a public system of capitalization of individual accounts managed by the Afore (Photo: File)

In 1997, Mexico decided to reform the traditional pay-as-you-go system by a public system of capitalization of individual accounts managed by the Retirement Fund Administrators. This 2020 the Afore turned 23 years old.

According to Consar, the change brought tangible benefits for workers such as unique and inheritable property rights, working in different companies without risk of losing their contributions, investing their savings to achieve better returns, transparency around Afores with periodic reports and information.

Furthermore, they clarified that for 80% of workers in the formal sector, these resources represent their main heritage and its only link with the financial system.

Through a statement the National Commission of the Retirement Savings System assured that workers’ savings today total 4.2 trillion pesos and represent 17.2% of GDP.

These resources are 15% of the total assets of the financial system and, for the first time in its history, Mexico has a growing stock of long-term savings.

For 80% of workers in the formal sector, these resources represent their main heritage (Photo: File)

They also assured that of the total resources accumulated in the pension system, 48.2% (2 trillion) represent the net commission returns that have been generated over time. The rest are tripartite contributions.

On the other hand, they affirmed that a trillion 269 thousand 042 million pesos of pension savings have been allocated to the development of Mexican companies of different sizes belonging to different sectors of economic activity. Within this amount is the financing to infrastructure and housing for 208 thousand 009 million pesos.

Finally they assured that they will continue working for « offer better pensions to workers; strengthen the investment regime so that savers obtain better performance and risk conditions; continue with the reduction of commissions that the Afore charge, so that they are not excessive; improve the quality of customer service and provide account holders with more guidance and better information so that they can make better decisions about their pension savings ”.

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