Luis Raúl Rodríguez-Reyes
Retirement savings from the perspective of the social economy: A long-term cooperative savings model.
Workers in Mexico face a bleak future at their time of retirement within the following thirty years. The current design of the retirement savings system, coupled with the low-density contribution rate -related to an endemic informality, causes a low pension coverage for the population. For example, CONSAR (The Mexican retirement regulator) estimates that only 24% of the workers that start paying contributions to social security from the second half of 1997 onwards (Afore generation) will get a pension, and only 29% of them (7% of the total) can enjoy a larger pension than the minimum. An issue that worsens the Mexican retirement landscape is its demographic profile. Although population ageing is a widespread concern all over the world, in developing countries this process has been, and is expected to be, more accelerated than in developed countries. For instance, the process that will lead the population over 65 from a proportion of 5% of the total population to an estimated 25%,in 2050 will take France 300 years, when it is expected that Mexico will face a similar ageing process in just 50 years. As a result of these two elements, Mexico faces in the next thirty years a crisis of population ageing, where one in four people will be over 60 years old, with a pension system that provides little coverage, and an economy characterized by informality and low productivity Regardless of the macroeconomic measures that the Mexican State would develop, the need to seek retirement savings solutions from the social economy perspective emerges from this situation. This proposal would be based on a different paradigm than the individualism prevailing in the current Mexican pension system, and that could offer a complement to the pension income of the population, mainly for the most vulnerable. This is the objective of this paper, which combines the proposal of a long-term savings model based on social economy principles, the experience in the intervention with Caja Popular Colonias Unidas, a Mexican credit cooperative, and research on social economy alternatives for the development of a proposal that has the potential to be sustainable and applicable in several countries and communities.