The mandatory pension plan in Mexico is, as of today, a Defined Contribution (DC) type. This plan was formally introduced in 1997; before this, the mandatory pension plan was a Defined Benefit (DB) type on a PAY-AS-YOU-GO basis. Workers who entered this mandatory pension plan after July 1, 1997 had to join the new plan. On the other hand, workers who were already in the labour market before that date could choose between either of the plans to retire.

Principal Financial in October 2017 bought MetLife’s pension fund management business in Mexico, MetLife Afore, adding a larger distribution network to Principal Afore’s current business in the country and the fifth largest player in the Mexican mandatory pension, voluntary long-term savings, and mutual funds competitive space. The transaction is expected to complete in early 2018.

While Mexico’s principal mandatory pension system began as a Defined Benefit (DB) program in 1973, in 1997 it was changed to a Defined Contribution (DC) plan, with individual accounts managed by financial institutions such as banks and insurance companies. This DC system is still open to new members, while the DB pension one is closed.