Domestic savings in Mexico and pension system reform

Abstract

The main aim of this paper is to offer a brief overview of the recent pension system reform in Mexico, viewed as a crucial element of the government strategy to increase the rate of domestic saving. There is a consensus that, at least in the shor run, an important part of increasing the Mexican national saving rate will fall on public saving. But for the medium and long terms, it is crucial to raise the rate of private saving. The achievement of this goal will require the design of adequate policies to promote this behavior. Although the recent National Development Program mentions the use of fiscal incentives and pension policy reform as the two main measures to improve private savings, we believe that the latter will be the single most important measure to achieve this goal. The current pension system reform in Mexico is an important stop towards this objective. But is shoud be stressed that gains from a reform are not straight forward. Therefore it is crucial for the current reform to offer the right incentives and signals, otherwise the probabilities for a success will be stroongly reduced.