Profits of the Afores are contracted by their high commercial expenses: Consar

That the retirement fund managers (Afores) still continue to show annual contractions in their profits is not a consequence of the 0.57% cap on the commission they charge on the balance of workers, their main source of resources, but rather because they still maintain high commercial expenses, this according to the National Commission of the Retirement Savings System (Consar).

If today there is a fund manager that is reporting a significant decrease in its income, it has more to do with the decision to maintain high commercial expenses,” Iván Pliego Moreno, president of Consar, told El Economista.

The head of Consar has informed that until 2021, more than 40% of the spending of the Afores was directed to commercial promotion, while the spending destined to the analysis of risks or investments did not even reach 10 percent.

For the public official, the reengineering of the management model of the fund managers coincided with what is perhaps the worst year in the 25-year history of the Retirement Savings System (SAR) and therefore it is a challenge for the Afores adjust to the new management model and overcome the current situation.

“A year ago we began this reengineering process in which we want to be more efficient, which means a reduction in regulatory expenses for the Afores and that they make the most of their investment limits,” he said.

Between January and October, the profits of the fund managers had an annual contraction of 70% in real terms, accounting for 3,992 million pesos and registering 24,146 million pesos of income from commission collection, this meant an annual contraction of 32% in real terms at the end of October.

Until that month, two of the 10 fund managers, Invercap Afore and Principal Afore, were still posting losses.

Pliego Moreno commented that communication with all the Afores is frank, open, permanent and “of course we are aware of your concerns and situations, but we are confident that the context will stabilize.”

Disabilities have marked the 25th anniversary of the SAR

This twenty-fifth anniversary of the SAR has not only been marked by decreases in the profits of the Afores, it has also been involved in a period of capital losses, which have totaled 422.268 million pesos at the end of October.

The official anticipated that during the first half of November the SAR has registered capital gains of close to 120,000 million pesos.

“We saw that September was a terrible month, perhaps the worst in the entire 25-year history of the SAR; in October he recovered and November is going well, but, like football, it’s not over until it’s over. We must wait, however, this trend (of capital gains) is seen. Normally at the end of the year, capital gains are observed because there is more activity”, explained the President of Consar.

It must be remembered that only in the ninth month of the year, the SAR recorded 200,000 million pesos in losses.

The loss is not a loss, it is the reduction in the value of the investment portfolio. The loss materializes when the worker is transferred from the Afore or withdraws resources from the account, therefore it is suggested not to carry out any of the procedures mentioned in periods of disability.

In 2023 the employer increases begin

As of the following year, and until 2023, fund administrators will receive an increase in employer contributions in worker savings as a result of the reform of the Social Security Law (LSS) that will force them to go from 6.5 to 15% of the contribution base salary.

“The Afores have been asked to be prepared to receive more resources and to propose investment projects that offer, as always, the most adequate returns; that they cover the risk limits and that all the appropriate procedures are carried out, such as investment risk analysis, to guarantee that these resources produce the results that we seek in the SAR”, Pliego Moreno pointed out.

For the labor sector that trades 4.01 Update Measurement Units (UMAS), there will be an increase from 3.15 to 4.241% in 2023. Those that trade from 3.51 to 4 UMAS, the increase will be 4%; from 3.01 to 3.50 it will be 3.95%; from 2.51 to 3.0 from 3.86%; from 2.01 to 2.50 from 3.75%; from 1.51 to 2.0, from 3.57% and from 1.01 minimum wage to 1.50 UMAS will see an increase of 3.28 percent. The UMA for this 2022 is equivalent to 96.22 pesos per day.

For the following year and during the rest of the decade, that is, eight years, those workers who earn a minimum wage, the employer contribution will be the same of 3.15%, that is, it will not present any modifications.

santiago.renteria@eleconomista.mx