IDEAS home Printed from
   My bibliography  Save this paper

Long-term returns and replacement rates in Mexico\\\'s pension system


  • Carlos Herrera


In this work I analyze the relevance of considering a range of elements related to the investment process to evaluate the long-term returns of Pension Funds and the possible impact of these on the replacement rates of participants in a Pension System. The analysis focuses on Mexico for three reasons; 1. Its Pension System was not greatly affected in relative terms by the 2008 financial crisis; 2. The long-term returns of the Pension Funds (Siefore) in the System are considered a key variable in determining the pensions of participants; and 3. It was one of the first OECD countries to introduce a life-cycle scheme into its pension model. The main result of this research is that the Mexican model of Siefores with diversified portfolios can offer reasonable returns over the longer-term, although it is not a control variable for the Pensions System. Once this limitation has been recognized, the only certain way that a pension or its replacement rate can be improved is to move towards higher contribution densities and to maintain appropriate contribution rates. If this is done, it is still possible to achieve additional improvements in pensions due to greater than expected returns. One route for achieving this is to increase the share of equity instruments in pension portfolios, which from a more wide-ranging perspective may also strengthen the Pension System as this alternative may also help to offset in part situations of low contribution densities by participants.

Suggested Citation

  • Carlos Herrera, 2010. "Long-term returns and replacement rates in Mexico\\\'s pension system," Working Papers 1026, BBVA Bank, Economic Research Department.
  • Handle: RePEc:bbv:wpaper:1026

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item



    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bbv:wpaper:1026. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (OSCAR DE LAS PENAS SANCHEZ-CARO). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.