Mexico Statutory and Private Employee Benefits (including Social Security) – Insights into Statutory Employee Benefits such as Retirement Benefits, Long-term and Short-term Sickness Benefits, Medical Benefits as well as Other State and Private Benefits, 2023 Update

Mexico Statutory and Private Employee Benefits Overview

Mexico’s social security system was introduced on December 31, 1942, with effect from January 19, 1943, and has since evolved in scope and coverage. The Mexican Social Security Institute (IMSS) and the Institute for Security and Social Services for Government Workers (ISSSTE) are the governing bodies of the social security system. The existing social security system was introduced on July 1, 1997, for voluntary contributions, and on September 1, 1997, for mandatory contributions. The social security system is based on defined contributions instead of the earlier pay-as-you-go system. The system provides coverage for disability, death, and retirement benefits. Individual accounts are created for employees, and contributions made by the employee, employer, and the government are credited therein.

The Mexico employee benefits report provides in-depth industry analysis, information, and insights of employee benefits, overview of the state and compulsory benefits, detailed information about the private benefits, insights on various central institutions responsible for the administration of the different branches of social security and the regulatory framework of the employee benefits in Mexico.

Employee Benefit Regulations in Mexico

The key regulations guiding the employee benefits market in Mexico are:

• The Law on labor relationship, Federal Labor Law, 1970
• The Law on social benefit, Social Security Law, 1995, implemented in 1997, with social developments in 2004
• The Law on housing support for employees, National Workers Housing Fund Institute’s Law, 1972
• The Law on social insurance, 1943

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Mexico Employee Benefits Segmentation by State and Compulsory Benefits

The key state and compulsory benefits offered by employers in Mexico are retirement benefits, death in service, long-term disability benefits, short-term sickness benefits, medical benefits, workers’ compensation insurance, maternity and paternity benefits, and other benefits.

Retirement Benefits: The Mexican pension system comprises of three pillars. The first pillar consists of a means-tested non-contributory pension scheme covering older adults by ensuring regular income support bimonthly and providing access to social protection and medical benefits to help them improve their living conditions. The second pillar has a fully funded mandatory DC plan known as the retirement savings system (SAR) with individual accounts of employees. The third pillar includes occupational voluntary retirement plans, such as private plans, personal plans, and individual retirement plans held in financial institutions.

Workers’ Compensation Insurance: Workers’ compensation is the state social insurance against industrial accidents and occupational diseases in Mexico. It is a compulsory social insurance scheme for employees with benefits in kind and earnings-related cash benefits. The insured worker is provided with medical and surgical aid, medicines, and prosthetic and orthopedic appliances, apart from cash compensation. Self-employed persons, household workers, employers, and public sector employees not covered under other schemes can purchase voluntary insurance. The Federal Labor Law of 1931 stipulates the rules for assisting workers and employees with occupational accidents and diseases in Mexico.

Maternity and Paternity Benefits: The government provides benefits to pregnant women in the form of free medical services. It also regulates employers to provide certain benefits.

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Mexico Employee Benefits Segmentation by Private Benefits

The key private benefits offered by the employers of Mexico are retirement benefits, death benefits, medical benefits, disability benefits, accidental death and dismemberment benefits, and other benefits.

Retirement Benefits: Employers in Mexico provide supplementary retirement benefits through DB, DC, or mixed pension plans. Usually, retirement plans are arranged via a trust fund or through a stockbroker investment contract.

Medical Benefits: Employers in Mexico provide supplementary medical benefits to their employees through a group private medical insurance plan. The prevalence of employer-sponsored supplementary medical benefits is low in the country. Despite the low cost of public healthcare, many people opt for private services due to the higher quality and availability of care.

Disability Benefits: Generally, most employers in Mexico provide supplementary, long-term disability benefits through a total permanent disability plan. However, some employers also offer long-term disability benefits as a rider under retirement and group life insurance plans.

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Scope

This report provides a detailed analysis of employee benefits in Mexico –

• It offers a detailed analysis of the key government-sponsored employee benefits, along with private benefits.
• It covers an exhaustive list of employee benefits, including retirement benefits, death in service, long-term disability benefits, medical benefits, workmen’s compensation insurance, maternity and paternity benefits, family benefits, unemployment benefits, Long-term care benefits, leaves and holidays and private benefits.
• It highlights the economic and regulatory situations relating to employee benefits in Mexico.

Key Highlights

• Ministry of Social Development, Institute of Security and Social Services for State Workers, National Pension Fund for State Service Workers, Mexican Social Security Institute, Retirement Fund Administrator, Investment Company Specialized in Retirement Savings Funds, and National Commission of the Retirement Savings System are responsible for the functioning of the overall social security system.

• A person’s national insurance contribution is determined based on their income.

• An insured person who is unemployed or unable to work and whose benefits have been exhausted is entitled to a credited contribution.

• In Mexico, employers provide voluntary retirement benefits to their employees through occupational pension plans.

Reasons to Buy

• Make strategic decisions using in-depth information related to employee benefits in the country.
• Assess employee benefits of the market, including state and compulsory benefits and private benefits.
• Gain insights into the key employee benefit schemes offered by private employers in the country.
• Gain insights into key organizations governing employee benefits market, and their impact on companies.