Amafore approves the reform approved by deputies to regulate unemployment benefits.

The Mexican Association of Afores ( Amafore ) approved the reform approved Monday in the Chamber of Deputies to regulate unemployment benefits and combat fraudulent practices in this process.

"At Amafore, we believe that any adjustment to the regulatory framework that contributes to improving workers' pensions and ensures that this right is exercised in a transparent, secure manner, free from malpractice and without intermediaries who could commit potential fraud, is positive," the Association explained.

He emphasized that, for a significant percentage of formal workers, the Afore individual account represents their primary asset, so "drawing on accumulated resources in times of crisis can be understandable and necessary."

He also reminded workers to be aware that these withdrawals not only reduce their savings account balance, but also reduce the number of weeks of contributions required to qualify for a pension.

"It is essential that workers understand the importance of repaying withdrawn resources as soon as their situation allows," Amafore reiterated.

Deputies seek to combat fraud

This Monday, the Lower House approved a reform seeking to combat fraudulent practices detected several months ago by the National Commission for the Retirement Savings System ( Consar ) in unemployment benefits.

The fraudulent scheme involved pretending to hire a high-wage worker, registering them with Social Security for a day, and then pretending to "fire" them so they could apply for a higher unemployment benefit.

This practice was carried out by private firms that, through misleading advertising, offered workers the option of withdrawing thousands of pesos from their savings accounts in exchange for hefty commissions on the withdrawals.

What changes with the reform?

The reform consists of an amendment to Article 191 of the Social Security Law, which now establishes that the amount of unemployment benefits under modality A will be calculated using "the average contribution base salary for the last fifty-two weeks" (the last year).

Prior to the reform, the law stated that the withdrawal amount was calculated using the "last contribution base salary," which allowed firms to register the worker with a high salary for a few days, to simulate the situation and thus extract more money from the Afore.

Additionally, the withdrawal limit for those with at least three years of Afore membership will be based on the worker's contribution history, and the 10 UMA (34,395 pesos) limit established by law prior to the amendments has been eliminated.

What will withdrawal rates be like after the reform?

Unemployment benefits are a right that all workers with retirement savings accounts in Afores can apply for after being unemployed for at least 46 days.

There are two ways to withdraw, which after the reform are as follows:

Modality A, which is the lesser of having 30 days of the average base salary for contributions from the last year or 11.50% of all accumulated resources in the account.

Modality B, which is the lesser of 90 days of the base salary of the last 252 weeks (4.8 years) or 11.50% of all accumulated resources in the account.

To access the first option, the employee's account must be at least three years old, while the second option requires five years or more.