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The need for an overhaul of retirement pensions and intergenerational relations

Roberto Ham-Chande, El Colegio de la Frontera Norte

Social security in Mexico has always shown limited covering, insufficient benefits and existence of privileges that results in a lack of solidarity between social classes and a negative redistribution of resources due to the use of tax resources for financing social security and pensions. Now it is facing a severe economic crisis. Bankruptcy is approaching very fast, thus incorporating the subject in the political arena. Accrued benefits as a lump-sum are equivalent to 1,1 times the GDP of 2003. Reforms towards defined contribution do not provide economic sustainability. Goods and services required by retired population always comes from the output of workers at the time of consumption. In this sense, pension systems must promote policies favoring future productivity. Social security and pensions must be regarded beyond its financial aspects and include demographic and socio-economic characteristics. A multi-pillar system is proposed that implies new social contracts.

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Presented in Poster Session 4: Poster Session 4