Retirement Funds Administrators ( es, Administradoras de Fondos para el Retiro, abbreviated AFORE) are companies authorized to manage
individual retirement accounts
An individual retirement account (IRA) in the United States is a form of pension provided by many financial institutions that provides tax advantages for retirement savings. It is a trust that holds investment assets purchased with a taxpayer's e ...
as authorized by the
Ministry of Finance and Public Credit
The Ministry of Finance and Public Credit ( es, Ministerio de Hacienda y Crédito Público), is the national executive ministry of the Government of Colombia responsible for the financial and budgetary matters of the country as well as implementi ...
of
Mexico
Mexico (Spanish: México), officially the United Mexican States, is a country in the southern portion of North America. It is bordered to the north by the United States; to the south and west by the Pacific Ocean; to the southeast by Guatema ...
and overseen by Comisión Nacional del Sistema de Ahorro para el Retiro
(CONSAR).
AFORES manage accounts that accumulate contributions by the employer, the
federal government and the
employee.
Accounts
Individual retirement accounts contain four separate sub-accounts which are:
*Retirement, lay-off and old age (RCV, "Retiro, Cesantía y Vejez" in
Spanish
Spanish might refer to:
* Items from or related to Spain:
**Spaniards are a nation and ethnic group indigenous to Spain
**Spanish language, spoken in Spain and many Latin American countries
**Spanish cuisine
Other places
* Spanish, Ontario, Can ...
). This sub-account contains funds contributed by the employer, federal government and employee.
**The employer contributes with an equivalent to 2% of the employee's salary to ''retirement'' and 3.15% of the salary to the ''lay-off and old age'' account. Contributions take place bimonthly.
**The government contributes 0.225% of the salary to the ''lay-off and old age'' account bimonthly and an equivalent of 5.5% of
minimum wage in the
Federal District
A federal district is a type of administrative division of a federation, usually under the direct control of a federal government and organized sometimes with a single municipal body. Federal districts often include capital districts, and they ...
.
**The employee contributes with 1.125% of the salary bimonthly.
*Voluntary contributions. An employee may also contribute extra funds voluntarily. Additional contributions may be done directly with the Afore or automatically deducted from the employee's salary.
*Housing. This is a sub-account into which employers contribute an equivalent of five percent of the employee's salary. Funds are deposited with the
INFONAVIT
The Institute of the National Housing Fund for Workers (Spanish: ''Instituto del Fondo Nacional de la Vivienda para los Trabajadores''; ''INFONAVIT'') is the Mexican federal institute for worker's housing, founded in 1972, and located at Barranca ...
through the
Fondo Nacional de la Vivienda
Fondo (german: Pfund; Nones: ''Fón'') is a ''comune'' (municipality) in Trentino in the northern Italian region Trentino-Alto Adige/Südtirol, located about north of Trento, precisely at the northern limit of the Val di Non.
Fondo borders the ...
("National Housing Fund") and the Afore only registers contributions and balances.
*Complementary contributions. This sub-account will contain additional funds contributed by the employer or the employee to increase the pension balance. These funds can only be withdrawn after retirement.
Withdrawals
Withdrawals of funds from these accounts is possible under certain situations such as:
*
Old age. Funds can be withdrawn on or after reaching the age of 65.
*
Layoffs. A maximum of 10% of the funds can be withdrawn on or after the day 46 of being unemployed. This option can be exercised every five years.
*
Marriage
Marriage, also called matrimony or wedlock, is a culturally and often legally recognized union between people called spouses. It establishes rights and obligations between them, as well as between them and their children, and between ...
. A maximum of 30 days of minimum wage in the Federal District can be withdrawn for wedding expenses.
*Home purchase. The funds in the ''housing'' sub-account can be withdrawn to buy a house. If these funds are not used before retirement they can be withdrawn then.
*
Death
Death is the irreversible cessation of all biological functions that sustain an organism. For organisms with a brain, death can also be defined as the irreversible cessation of functioning of the whole brain, including brainstem, and brain ...
*
Accident
An accident is an unintended, normally unwanted event that was not directly caused by humans. The term ''accident'' implies that nobody should be blamed, but the event may have been caused by unrecognized or unaddressed risks. Most researche ...
s and
illness
A disease is a particular abnormal condition that negatively affects the structure or function of all or part of an organism, and that is not immediately due to any external injury. Diseases are often known to be medical conditions that a ...
es leading to
disability
Disability is the experience of any condition that makes it more difficult for a person to do certain activities or have equitable access within a given society. Disabilities may be cognitive, developmental, intellectual, mental, physical, ...
See also
*
Mexico Pension Plan Mexico reformed its pension system in 1997, transforming it from a pay as you go (PAYG), defined benefit (DB) scheme to a fully funded, private and mandatory defined contribution (DC) scheme. The reform was modeled after the pension reforms in Chil ...
External links
AFORES{{in lang, es at the
(Spanish: "Comisión Nacional para la Protección y Defensa de los Usuarios de Servicios Financieros", abbreviated "Condusef").
Retirement
Financial services companies of Mexico