Fitch Publishes Special Report on Mexico and Chile's Pension Systems

MONTERREY, Mexico--(BUSINESS WIRE)-- Fitch Ratings has published a special report analysing the scope, figures and relevant aspects of the Savings for Retirement System of Mexico (Sistema de Ahorro para el Retiro, [SAR]) and the Chilean Pension System (Administradoras de Fondos de Pensiones, [AFP]). In addition, the report addresses the impact SAR could have in the long term based on the scale reached by the Chilean system after 35 years.

Fitch's report presents comparative figures at 18 years for each system. As of September 2015, SAR's net assets reached MXN2,470 billion (USD149.7 billion), equivalent to 13.6% of the Gross Domestic Product (PIB); the assets per worker were USD2,776.19, with 43% of the population registered. In 1998, after 18 years of operations, the AFP's resources under management were USD31.145 billion, corresponding to 40.2% of the GDP, representing 40.3% of the population registered. The assets per affiliated were USD5,194.27 or almost double that achieved by SAR.

In the report, Fitch contrasts SAR's multi-funds models and investment regime with those of AFP. The Siefore's resource concentration, which applies affiliates' preferences, is subject to workers' age in comparison with AFP. AFP's equity maximums double those of SAR, the mandatory minimums of foreign securities in Chile double the maximums in Mexico, and AFP's lower risk portfolios could have a minority portion of government instruments. The Siefores of higher risk could be structured only with those securities.

In addition, Fitch assesses factors determining resource growth in both systems: contribution rate, the investment structural ceilings, fee percentages, population size, and others. At 18 years of the SAR, its figures show some similarities to and differences from the AFP figures from 1998.

Fitch expects that SAR can aspire to align its figures with those of its Chilean counterpart and achieve higher replacement rates aspired by workers, if some of the pillars of its system are strengthened and some modifications are made, such as the increase of the total contribution rate.

The full report 'Mexico's Saving for Retirement System and the Chilean Retirement System' is available at www.fitchratings.com and www.fitchratings.mx.

Additional information is available at 'www.fitchratings.com'.

The Long View: Mexican and Chilean Pension Systems (A Comparison of Figures, Investment Regimes and Growth Generators)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=878014

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160314006149/en/

Fitch Ratings
Arturo Rueda
Senior Director
Fitch Mexico S.A. de C.V.
Prol. Alfonso Reyes 2612,
Monterrey, N.L. Mexico
or
Adriana Beltran
Director
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526
[email protected]

Source: Fitch Ratings

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