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

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Listed:
  • Emma Aguila
  • Michael D. Hurd
  • Susann Rohwedder

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.

Suggested Citation

  • Emma Aguila & Michael D. Hurd & Susann Rohwedder, 2014. "How Do Management Fees Affect Retirement Wealth Under Mexico’s Personal Retirement Accounts System?," Working Papers WR-1023, RAND Corporation.
    • Handle: RePEc:ran:wpaper:wr-1023
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    Cited by:

    1. Bernal, Noelia & Olivera, Javier, 2020. "Choice of pension management fees and effects on pension wealth," Journal of Economic Behavior & Organization, Elsevier, vol. 176(C), pages 539-568.
    2. Lučivjanská, Katarína & Lyócsa, Štefan & Radvanský, Marek & Širaňová, Mária, 2022. "Return adjusted charge ratios: What drives fees and costs of pension schemes?," Finance Research Letters, Elsevier, vol. 48(C).

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    More about this item

    Keywords

    retirement wealth accumulation; retirement fund management fees; social security;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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