MEXICO - Private pension scheme providers' hands have been untied a little as regulator CONSAR relaxed investment limits in order to improve diversification and returns for members.
It came after the regulator passed a bill to allow pension funds to invest up to 30% in equities and foreign assets.
As a pay off, providers must now offer two funds: one relatively conventional, the other more risky, according to the member profile.
The bill stated: “CONSAR’s emphasis on promoting fee-based competition has so far been warranted because pension funds portfolios were until recently very similar – they were invested almost exclusively in government bonds and the dispersion of the portfolio returns was insignificant.”
Mexico’s private pension industry was recently reported to be worth US$68 and growing year on year.
The bill noted that growth in the industry was outstripping the availability of suitable assets, hence the need to open up international markets to funds.
This move follows controversial changes approved by the Mexican Congress last week which could affect the health and pension system for 2.8m government workers.
New laws will create individual, private accounts unlike the current communal pool system.
PP has compiled a list of what to watch out for over the coming months.
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