How Do Management Fees Affect Retirement Wealth Under Mexico's Personal Retirement Accounts System?

36 Pages Posted: 30 Jan 2014 Last revised: 18 Feb 2014

See all articles by Emma Aguila

Emma Aguila

RAND Corporation; University of Southern California - Schaeffer Center for Health Policy and Economics

Michael D. Hurd

RAND Corporation; State University of New York at Stony Brook - College of Arts and Science - Department of Economics; National Bureau of Economic Research (NBER)

Susann Rohwedder

RAND Corporation

Date Written: December 18, 2013

Abstract

In 1997, Mexico transformed its pay-as-you-go social-security system to a fully funded system with personal retirement accounts, including management fees. This paper examines changes in retirement wealth resulting from this new system. It found management fees drained a significant proportion of individuals’ retirement wealth and had the effect of increasing the number of persons claiming a government-subsidized minimum pension, particularly from the time the system was introduced in 1997 until adjustment to management fees in 2008. Since 2008, retirement wealth accumulation has been similar to that of the previous system.

Keywords: retirement wealth accumulation, retirement fund management fees, social security reform, Mexico

JEL Classification: H55, G23, J32

Suggested Citation

Aguila, Emma and Hurd, Michael D. and Rohwedder, Susann, How Do Management Fees Affect Retirement Wealth Under Mexico's Personal Retirement Accounts System? (December 18, 2013). RAND Working Paper Series WR-1023, Available at SSRN: https://ssrn.com/abstract=2387211 or http://dx.doi.org/10.2139/ssrn.2387211

Emma Aguila (Contact Author)

RAND Corporation ( email )

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University of Southern California - Schaeffer Center for Health Policy and Economics ( email )

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Michael D. Hurd

RAND Corporation ( email )

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Santa Monica, CA 90407-2138
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State University of New York at Stony Brook - College of Arts and Science - Department of Economics ( email )

Stony Brook, NY 11794
United States

National Bureau of Economic Research (NBER)

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Susann Rohwedder

RAND Corporation ( email )

P.O. Box 2138
1776 Main Street
Santa Monica, CA 90407-2138
United States

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