Maquiladora worker pensions: Some basics
CONSAR administers formal sector individual retirement accounts, as well as maquiladora worker pensions.
In addition to a straight hourly wage, the fully-fringed cost of labor in Mexico includes mandated payments to the government payroll tax fund, Mexican Social Security (IMSS), a national housing fund (INFONAVIT), the yearly”aguinaldo” (profit sharing), a Christmas bonus and a vacation premium. Along with these federally defined benefits, manufacturers operating in the maquildora industry often offer a mix of market-driven voluntary benefits in Mexico that are paid to workers, in order to ensure their ability to attract new employees in both number and quality. What is offered is predominantly determined by conditions prevalent in specific labor markets. Items that fall into this category often include:
- company provided meals
- food coupons
- transportation vouchers
- prescription medicines
- production-based bonuses
- perfect attendance bonus
In addition to the aforementioned, government mandated maquiladora worker pensions are adminstered through the Comision National del Sistema de Ahorro para el Retiro (CONSAR) as an additional worker benefit. CONSAR operates under the purview of Mexico’s Secretaria de Hacienda and Credito Publico, which is Mexico’s counterpart to the IRS in the United States. Its structure and power are defined by the Retirement Savings System Law of 1996. In the year 2010, workers with individual retirement accounts administered by CONSAR had fifteen retirement fund companies from which to choose to manage their savings. These funds are known in Spanish by the ACRONYM “AFOREs”. AFOREs are regulated by the Comision National del Sistema de Ahorro para el Retiro. It is the responsibility of CONSAR to report on the performance of maquiladora worker pensions to each account holder on an annual basis.
As is the case with other salaried personnel in the country, maquiladora worker pensions consist of individual accounts that are the property of each employee. Contributions made to retirement funds by workers are tax deductible up to an amount that is equal to five minimum wages or up to a ceiling of 10% of annual wages, whichever of the two amounts is the smaller. Employers’ contribution to maquiladora worker pension accounts can be deducted from company profits for Mexican federal taxation purposes.
Maquiladora worker pensions pay out benefits at age sixty-five, after a total of one thousand two hundred weeks of contribution. Related life insurance and disability benefits can be drawn upon after a participation period of two hundred and fifty weeks. If an employee has not made contributions for the defined number of weeks, he or she may withdraw the balance of the funds in the retirement account as one lump sum payment.