Mexican Workers Social Benefits
In Mexico there are various social benefits granted by law to the working population, that cover their various primary social needs (i.e. housing, health, retirement and senescense compensation.). In order for the employee to be entitled to these benefits, he must make social contributions in a tripartite approach during his working life (workers, employers, government). We will try to give you an idea of what they are, and what laws guarantee the social protection of workers:
According to Article 2 of the Federation Tax Code, the social security contributions are:
II. Social Security contributions are the contributions established by law for people who are replaced by the State in compliance with the obligations imposed by law on social security matters or to the people receiving social security benefits provided by the same state.
This way, the main of these contributions provide for the retention of the IMSS and ISSSTE (health institutions), INFONAVIT or FOVISSSTE plans, and savings fund for retirement (AFORE) . The taxes (IRS) and others belong to a different category.
About the Health Institutions. - Matters of health are stipulated in the constitution as an obligatory regime. In the law of the IMSS, the 5 regimes to protect workers in their working life, his immediate family and in his old age include:
I. Risks at work;
II. Sickness and maternity.
III. Disability and life;
IV. Retirement, unemployment in old age, and senescense
V. Childcare and social benefits.
The IMSS (Mexican Social Security Institute) is the main public health institution with more than 16 million union members, and the ISSSTE (for the state workers) in second place with 15 million. The fees that apply to workers may vary (they are published annually in the law of the IMSS) according to the worker's wages and benefits (IMSS also provides day care and medical research, surgeries and more).
About Housing benefits. The Institute of the National Housing Fund for Workers (INFONAVIT) is a three-part Mexican institution in which workers, the businesses, and the government sectors participate. It is dedicated to provide loans to obtain housing for the workers and provide assets to the savings in the National Housing Fund for retirement pensions. It was founded in May 1972 by former President Luis Echeverria Alvarez. This institute has facilitated the acquisition of housing for many people in the Mexican society that have a difficult time acquiring a mortgage. The case of FOVISSTE is very similar thus, since 1972 its mission has been to provide mortgage loans to state workers.
To obtain INFONAVIT credits is necessary to collect 116 points, that you can earn based on age, salary and job position, as well as the amount is also calculated based on these three. The employer must give a 5% salary for this benefit.
About AFORES.- The AFORES are financial companies (such as banks, insurers or others) that specialize in managing and investing the savings for retirement (voluntary) safely, of millions of workers enrolled in health institutions or listed on their own. AFORES must procure the most efficiency possible during the investment cycle of resources.
AFORES were created (Administrators Retirement Funds) by the Social Security Act (LSS) in May of 1996, starting its operations in 1997 with the goal of providing personal accounts for workers, and so the savings generated throughout their career, could grow with the generated assets. Thus there are 5 variable accounts depending on the worker's age.
This way, from the wage a worker receives an amount is deducted that, along with another part that the employer provides, and another sum provided by the Government, a savings fund is created (which is the workers individual account), that its put to work (invested) from the first day and generates a good return to the worker. This way, the savings for the future grow little by little. In addition, the AFORES receive donations of those workers (IMSS affiliates or unaffiliated institutions) who wish to take advantage of the high interest rates it offers, plus significant tax benefits for the worker (deductions).
On the withholdings, commissions, and performances that each AFORE gives, these really are very variable, and can range from the most optimal net return 7.4% to 3.78%, and discounting commissions amounts.
Many of these forms are obviously not shielded against corruption, the highs and lows of the stock market, etc. (unless they have insurance) but they are better than the classic choice of leaving everything to "chance" which many opt for. In general, these capital contributions are important to Mexicans, it helps in some way to have a primary care provider, to buy a house, and to be prepared for retirement!
Article produced by the Editorial Team of "Explorando Mexico".
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