Retirement Funds Administrators
Encyclopedia
Retirement Funds Administrators are companies authorized to manage individual retirement accounts as authorized by the Secretaría de Hacienda y Crédito Público of Mexico
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.
Mexico
The United Mexican States , commonly known as Mexico , is a federal constitutional republic in North America. It is bordered on the north by the United States; on the south and west by the Pacific Ocean; on the southeast by Guatemala, Belize, and the Caribbean Sea; and on the east by the Gulf of...
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). 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 wageMinimum wageA minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell their labour. Although minimum wage laws are in effect in a great many jurisdictions, there are differences of opinion about...
in the Federal District. - The employee contributes with 1.125% of the salary bimonthly.
- Voluntary contributions. An employer may also contribute extra funds voluntarily. Additional contributions may be done directly with the Afore or automatically deducted from the employer'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 through the Fondo Nacional de la Vivienda ("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 ageOld ageOld age consists of ages nearing or surpassing the average life span of human beings, and thus the end of the human life cycle...
. Funds can be withdrawn on or after reaching the age of 65. - LayoffLayoffLayoff , also called redundancy in the UK, is the temporary suspension or permanent termination of employment of an employee or a group of employees for business reasons, such as when certain positions are no longer necessary or when a business slow-down occurs...
s. 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. - MarriageMarriageMarriage is a social union or legal contract between people that creates kinship. It is an institution in which interpersonal relationships, usually intimate and sexual, are acknowledged in a variety of ways, depending on the culture or subculture in which it is found...
. 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.
- DeathDeathDeath is the permanent termination of the biological functions that sustain a living organism. Phenomena which commonly bring about death include old age, predation, malnutrition, disease, and accidents or trauma resulting in terminal injury....
- AccidentAccidentAn accident or mishap is an unforeseen and unplanned event or circumstance, often with lack of intention or necessity. It implies a generally negative outcome which may have been avoided or prevented had circumstances leading up to the accident been recognized, and acted upon, prior to its...
s and illnessIllnessIllness is a state of poor health. Illness is sometimes considered another word for disease. Others maintain that fine distinctions exist...
s leading to disabilityDisabilityA disability may be physical, cognitive, mental, sensory, emotional, developmental or some combination of these.Many people would rather be referred to as a person with a disability instead of handicapped...