MEXICO - Mexico will allow pension operators to hire third-party firms beginning in May to help manage their investments, the chief of the country's retirement-fund regulator said.
The agency, known as Consar, or National Commission for the Pension System, plans to publish the rules for contracting outside investment firms before April 30, Pedro Ordorica, Consar's president, said in an interview during a Mexican banking conference in Acapulco.
The purpose is to increase the technology, efficiency and expertise for investing workers' savings, especially abroad, he said.
"We'll have the most expert people managing the savings of Mexicans," Ordorica said. "We're going to enrich our financial technology and knowledge and widen our perspectives on where markets are going."
Mexican pension funds, known as Afores, managed 1.38 trillion pesos ($117.7bn) of worker savings at the end of February and the funds' assets have grown 24% annually, on average, over the last decade, according to Consar's presentation on its website. The funds are limited to investing 20% of assets abroad.
Mexico's economy rose 5.5% last year, the quickest pace in a decade, after dropping 6.1% in 2009. Mexico's Finance Ministry increased the country's 2011 growth forecast to 4.3% from 4%, as rising employment leads to more demand, according to a statement from the Finance Ministry.
Consar gradually has allowed Mexican pension funds to diversify their investments into equities, foreign securities and structured instruments since individual worker-savings accounts were created in 1997. With the help of outside fund managers, the regulator may be able to open the system to more securities, Ordorica said. The firms can be based in Mexico or abroad, he said.
Third-party managers should enable Afores to lower costs and improve yields, helping attract contributions from workers beyond the amounts mandated by law, Ordorica said. The measure will help small pension-fund operators compete with larger ones that have deeper pockets for investment research, he said. The Afores would create separate accounts to be overseen by the outside firms, he said.
The pension funds won't be able to farm out investment management entirely, Ordorica said. He declined to comment on specific regulations on hiring outside firms.
"The pension-fund company can't be an empty shell. It has to continue being a fund manager," Ordorica said.
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