▲ Radical voices can delay the modification, says Abraham Vela.Photo Marco Peláez / file

Braulio Carbajal

La Jornada newspaper
Monday May 25, 2020, p. twenty-one

The six-year term of President Andrés Manuel López Obrador will not end without a profound reform of the pension system being carried out, said Abraham Vela, president of the National Commission of the Retirement Savings System (Consar); However, he accepted that the Covid-19 pandemic has represented an obstacle, so it will be until 2024 when it will take place. It will be the great legacy of this administration.

In an interview with La Jornada, he indicated that the intention not to kick the boat forward continues, to the extent that the talks between Consar and the Ministry of Finance and Public Credit (SHCP) continue.

The President wants to give himself a place out of the pandemic to reactivate the economy, that the elections pass and the revocation of mandate, so that the pension issue is not too politicized. The boat will not be kicked, but it will be until 2024 when that challenge, which is also a matter of social justice, will be reversed, he said.

On the path that the reform will follow, he assured that for the Consar and the Treasury there is no doubt: it must be one that strengthens the system based on the Afore, with greater contributions, and that is complemented by a universal pension, which must be less equivalent to a minimum wage.

You don’t have to be a genius or discover the black thread. It must be a combination of strengthening the universal pension, which implies a strong fiscal cost, and an increase in tripartite contributions. Moving to other parameters, such as retirement age or trading weeks, doesn’t help much.

Weeks before the health crisis broke out, the SHCP commissioned Consar to analyze the situation of the pension system and propose solutions to solve the failures, on which the reform would be based. Said diagnosis, according to Vela, is practically ready, so the next step is to present it with all the entities involved and, finally, with López Obrador.

From the perspective of the president of the Consar, what could delay the progress of the reform are the radical voices of the 4T, which have presented unfeasible proposals, such as pension resources becoming government-administered.

In 4T there are people with different ideologies and some are very radical. If the latter convinces the President that the reform that we and the Treasury will present is not the correct one, the process may be delayed, but I do not think that will happen. That there will be reform, there is no doubt. We will have to wait to see exactly the way.

Asked if a reform until 2024 will not be too late for many Mexicans, he pointed out that in the current administration there will be very few workers who will retire under the 1997 law and the next challenge will be the greatest. At some point this topic will bite very hard. So regardless of who heads the next one, the President wants the adjustments to be made in his own.

Vela said that given the high levels of unemployment withdrawals, the SHCP asked the Consar to prepare a study on the liquidity of the Afore. Emphasize whether, if government securities had to be sold, how much it would affect the price of the bonds and, consequently, the pension savings of the workers.

Last April, the amount of unemployment withdrawals increased 95 percent and, according to the president of the Consar, the numbers are expected to be just as dramatic in May and June, which is why he has warned about the liquidity levels of the Afore, although the sector has said that it has enough to face the problem.

If the Afore were to run out of liquidity to pay partial withdrawals, they would have to sell the assets they have invested at a lower value, which would cause losses.

In this sense, he highlighted: It must be clear that the savings of the workers will be safe, but if there becomes a lack of liquidity, there may be losses in the second half of the year.

Vela highlighted that with the capital gains that have been generated so far this year, the capital losses that were registered in February and March have been practically overcome, so, although there is still volatility in the markets, the system is expected to close the year with earnings for workers.