Profuturo GNP open to commission cuts

Mexico's third largest pension manager in terms of assets Afore Profuturo GNP might consider lowering its commission structure as recent commission cuts by competitors have priced the company at the high end of the market, local daily El Financiero reported. "We are always studying our commission regime because our objective is to give the best pension to affiliates and this includes a combination of returns and commission. For that reason in the moment that we consider that our proposal is no longer the best in the market, we will make the necessary changes in that regard," Profuturo GNP CEO Eduardo Silva was quoted as saying. Silva said contributors should be more worried about an Afore's return on assets under management and other factors rather than its commission structure. "We clearly indicate to our clients that returns are more important than the differences in commissions," he said. Mexico adopted a private pension system in 1997 to replace the state funded system managed by social security agency IMSS. Under this model, salaried 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. In the last six months the country's 12 Afores have engaged in a brutal price war in response to political pressure from Congress and regulator Consar to reduce commissions. Afore Profuturo GNP charges a 1.68% commission on contributions and an annual 0.70% commission on a worker's account balance, making it the most expensive Afores on the market, according to Consar figures. Afore Profuturo GNP is controlled by one of Mexico's largest insurers, locally owned GNP. At the end of the third quarter the company's Siefore had assets under management of 40.2bn pesos and 3.06 million clients.