On December 2007 Mexican congress approved the Federal Law of Budget. This law allows the use incomes from oil to create a found named fund for Supporting Pensions Systems Reorganization (FARP in Spanish).
Oil surplus is used to stabilize the incomes of the states and the investments of PEMEX on infrastructure, after, surplus are divided in four parts which are used for federal general infrastructure; general infrastructure on states; general infrastructure on PEMEX and the FARP.
The Ministry of finance determines the use that can be given to the fund and the rules states need to meet in order to have access to the FARP. The fund can be used for:
1. Pay operating expenses
2. Support liabilities of the federal government resulting from current obligations, the payment of the minimum pension and/or the cost associated to the restructuring of IMSS and ISSSTE.
3. Support obligations of other federal entities, including the armed forces
4. Support the states in cost associated to the restructuring of their plan.
In order to access the fund it is required to:
1. Establish a system based on individual accounts for new workers
2. Establish mechanism that allow active workers to migrate to the new system without losing accrued benefits
3. Reduce the net present value of future liabilities
In Mexico in general the states have pension funds for workers of the public sector, which in many cases include the workers of the municipalities. There are a few states that have contracted out this benefit to ISSSTE. Unfortunately, there is little information on states systems and there is not a consolidated number of the value of future liabilities, although some specialists have calculated is over 10% of the GDP.
In Brazil, the Ministry of Social Protection works with the municipal plans and this have allowed them an important coordination in fundamental aspects. A review of this experience can lead to important lessons.
Oil surplus is used to stabilize the incomes of the states and the investments of PEMEX on infrastructure, after, surplus are divided in four parts which are used for federal general infrastructure; general infrastructure on states; general infrastructure on PEMEX and the FARP.
The Ministry of finance determines the use that can be given to the fund and the rules states need to meet in order to have access to the FARP. The fund can be used for:
1. Pay operating expenses
2. Support liabilities of the federal government resulting from current obligations, the payment of the minimum pension and/or the cost associated to the restructuring of IMSS and ISSSTE.
3. Support obligations of other federal entities, including the armed forces
4. Support the states in cost associated to the restructuring of their plan.
In order to access the fund it is required to:
1. Establish a system based on individual accounts for new workers
2. Establish mechanism that allow active workers to migrate to the new system without losing accrued benefits
3. Reduce the net present value of future liabilities
In Mexico in general the states have pension funds for workers of the public sector, which in many cases include the workers of the municipalities. There are a few states that have contracted out this benefit to ISSSTE. Unfortunately, there is little information on states systems and there is not a consolidated number of the value of future liabilities, although some specialists have calculated is over 10% of the GDP.
In Brazil, the Ministry of Social Protection works with the municipal plans and this have allowed them an important coordination in fundamental aspects. A review of this experience can lead to important lessons.
No comments:
Post a Comment