Afore XXI: Social security agency to stay on as shareholder

Mexico's financially troubled social security agency, the IMSS, has no plans to sell its 50% stake in pension fund manager Afore XXI, the company's CEO Javier Beristain was quoted as saying by local financial daily El Financiero. The company returned profits of 100mn pesos (US$9.1mn) to the IMSS alone last year, Beristain said, a positive contribution to an agency that faces sky rocketing healthcare and labor liabilities. Afore XXI has 26bn pesos under management and about 2.27 million affiliates, having added 236,000 new clients this year to date. Mexico adopted a private pension system in 1997 to replace the state funded system managed by social security agency IMSS. Under this model, workers contribute 6.5% of their gross salary to pension fund managers, or Afores, which then invest that money through special investment vehicles called Siefores. The IMSS employs about 375,000 people and provides pension and healthcare services to around 50 million Mexicans. The agency faces serious long-term solvency issues due in large part to the pension and healthcare obligations with its own workforce. Afore XXI is jointly controlled by the IMSS and US-based Prudential Financial.