Spending on pensions is equivalent to 15% of the federal budget

At the end of the third quarter, the net budget of the public sector to cover the pensions and retirements of retired workers stood at one trillion 42 thousand 133 million pesos, a nominal growth – without discounting inflation – of 10 percent compared to the 946 thousand 198 million pesos for the same period last year, official data reveal.

According to the most recent public finance report from the Ministry of Finance and Public Credit (SHCP), this is an unprecedented level for a similar period since records exist, after the trillion-peso barrier was exceeded last month. .

The resources allocated to this segment during the first 10 months of the year are equivalent to 15 percent of the 6 trillion 705 billion pesos of total government spending and 21 percent of the 4 trillion 834 billion pesos of the programmable spending, that which is already labeled to provide public goods and services to the population.

The resources are used by the public sector to pay federal government retirees who worked in state companies such as Petróleos Mexicanos or the Federal Electricity Commission, as well as those registered with the Mexican Social Security Institute, under the 1973 law. , a regime that changed in 1997 to make way for retirement fund administrators (Afore).

With the creation of the Afore, a pension regime began in which more than 70 million people contribute. It consists of a retirement based on the savings of workers throughout their working life and no longer financed by the State, as was the case until 1997. Since then, the pension obligations that are generated are no longer borne by the public sector.

In 2023, the federal government’s pension spending was one trillion 302 thousand 705 million pesos; If the same trend continues, a new historical maximum will be reached in 2024.

For decades, the payment of pensions is one of the items that have put the most pressure on public finances due to its exponential growth, which far exceeds the rate at which income is collected, which is why various specialists consider pensions a time bomb.

According to the SHCP, in 2010, pension spending was 343,334 million pesos; By the middle of the decade it shot up to 588,585 million pesos and in 2020 it stood at 954,172 billion pesos.

By 2021, this government spending exceeded the trillion-peso barrier for the first time in history and is expected to close 2024 at around one trillion, 500 billion pesos. If this projection comes true, federal government pension spending will have skyrocketed around 330 percent in 14 years.