Mexico: Financial Sector Assessment Program Update: Technical Note: The Pension Annuity Market
IMF Staff Country Reports, May 15, 2007
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- Mexico: Financial Sector Assessment Program Update: Technical Note: The Pension Annuity Market
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Bibliographic details
- Published: May 15, 2007
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781451825718.002
Overview
- Publication date: May 15, 2007
- Type: IMF Staff Country Report (Country Report No. 2007/163, Issue 163)
- Pages: 49
- DOI: https://doi.org/10.5089/9781451825718.002
- ISBN: 9781451825718
- ISSN: 1934-7685
- Summary statement: The paper presents a technical note on Mexico’s Financial Sector Assessment Program update, highlighting Mexican experience and lessons for countries designing the decumulation phase of newly established second pillars.
Key findings and characteristics of the Mexican annuity market
- The Mexican experience displays interesting characteristics that provide lessons for other countries that still need to design the decumulation phase of their newly established second pillars.
- Rationale for choice of specialized annuity providers:
- To avoid the contagion effect from composite life and nonlife insurance companies operating annuities.
- To avoid the implicit government guarantee associated with a benefit provision for which participation has been mandated by the federal government.
Policy implications and lessons
- The structure of specialized annuity providers is presented as a policy choice with trade-offs:
- Benefit: reduced contagion risk from composite insurers.
- Consideration: the presence of an implicit government guarantee where participation is mandated, which has implications for market design and risk allocation.
- The Mexican case is positioned as a practical reference for countries designing decumulation mechanisms within mandatory pension systems.
Subjects and keywords (as listed)
- Subjects: Aging, Expenditure, Financial institutions, Insurance, Insurance companies, Labor, Pension spending, Pensions, Population and demographics
- Keywords: Aging, annuity company, annuity market, annuity provider, base salary, Central and Eastern Europe, company performance, CR, Global, Insurance, Insurance companies, interest rate, ISCR, key rate, market penetration, pension annuity provider, Pension spending, Pensions, private sector, rate of return
International Monetary Fund. "Mexico: Financial Sector Assessment Program Update: Technical Note: The Pension Annuity Market", IMF Staff Country Reports 2007, 163 (2007), DOI: https://doi.org/10.5089/9781451825718.002.