Back

Baker & McKenzie

The mentioned Decree foresees that from now on, the Mexican Social Security Institute ("IMSS") will not be able to assign the following resources to the special account of the Retirement and Pension System ("RPS") of the Fund for the Fulfillment of the Labor Obligations of Legal or Contractual nature ("Fund"):

i)	the revenue generated from the contributions paid by the employers and employees established in the Social Security Law;
ii)	the funding that the IMSS receives from the Federal Government; and
iii)	the income resulting from the operative, actuarial and financial reserves constituted by the IMSS.

However, the Second Transitory Article of the Decree establishes that the IMSS, at the expense of the social security contributions, will continue covering the benefits derived from the RPS to all those individuals who as of now are considered as IMSS' employees, pensioned employees or retirees.

According to the foregoing, the Decree does not give any remedy to the current problem of the IMSS, regarding its labor liability in pension matters. Therefore, the IMSS will not have the resources to fulfill its employer obligations. This could generate an increase in the social security contributions in future years.