BENARDO GONZÁLEZ ROSAS

Mexico 2021 | FINANCE | INTERVIEW

By working to raise awareness of the importance of savings and making it easier for workers to manage AFOREs on their phones, AMAFORE is driving the sector forward and contributing to economic recovery.

Benardo González Rosas
BIOGRAPHY

Bernardo González Rosas has been President of AMAFORE since 2019. He has more than 20 years of experience in Mexican financial sector. This year, he started working for the World Bank as a financial sector expert. He also previously worked for different multilateral organization such as the Inter-American Development Bank and the Development Program for the UN and was assistant secretary for development banks at the Ministry of Finance. For more than six years, he was a financial sector regulator, first as vice president for regulatory policy at the National Banking and Securities Commission (CNBV), assistant secretary for banking, securities, and savings at the Ministry of Finance, and finally chairman of CNBV. He holds a bachelor's degree in business administration with specialization in finance from ITAM and a master's of science degree from McCourt School of Public Policy at Georgetown University. He has taught public finance at ITAM and Universidad Iberoamericana.

What were some of the biggest achievements of AMAFORE in 2020?

Our main challenge was that by mid-2020, some legislators started to propose that the retirement fund system be nationalized and not necessarily by private pension funds like retirement funds administrators (AFORE). That was a significant challenge and a great setback for markets and protection to pension funds. Fortunately, after a great deal of discussions, we worked on creating a proposal to enhance the system and adjust its original parameters along with the Business Coordinating Council (CCE). We had started working on it since September 2019 and had an open dialogue with the new administration, President López, and the Finance Minister to enhance the system. Finally, in September 2020, the president sent a bill to congress to reform our private pension funds management law. The private sector offered to gradually increase the amount of savings they contribute on behalf of the workers; in exchange, the government was willing to strengthen the system and reduce the minimum time required to work formally to attain a minimum guaranteed pension. The second challenge has to do with the pandemic and its effects on the pension system in Mexico, which was two-fold. The first one has to do with partial withdrawals from AFOREs. Those funds have been extremely useful for those workers that have lost their jobs, and 1.2 million people made a partial withdrawal in 2020 because Mexico does not have unemployment insurance. The other effort the sector made was going 100% digital. After a complicated year, we are currently facing a new phase right now for 2021 and the coming years. Nevertheless, in this volatile environment, the pension funds achieved an amazing record return on funds in favor of workers for this crisis year. On top of this, the reform places Mexico's system in a better position than all other countries in Latin America. Right now, after the reform, 90% of workers will have a pension, and that pension will be enough for a decent retirement, at least according to OECD averages. We have an important future in managing the pensions and funds of workers in Mexico.

Could you tell us about the digital transformation being incentivized in AFORES and how it plans to help make this transition go smoothly?

This change is extremely relevant, not only because we are making it easier for workers to access AFOREs from their mobile phones, but also because in this sector most of the expenditures we incur are related to commercial costs from people trying to convince workers to move their savings from one AFORE to another one. This app gives workers the power to decide which AFORE they want to keep their savings in and helps them change their funds manager with little effort via the app. AMAFORE has a close relationship with the regulators and supervisors in order to represent the interests of AFOREs and workers. We had many discussions with CONSAR on how this app should work and the elements needed to validate that it is the worker who is seeking a change of manager and not necessarily the commercial forces that sometimes create distortions in this market.

In what ways are pension plans preparing for the upcoming changing demographic considering the average age of the population is 29 years?

Right now, with the reform we have strengthened the system, and we can assure all Mexicans, particularly younger ones, that everyone will have a sufficient pension according to international standards. That puts Mexico ahead of many countries. We have had excellent results in terms of interest rates on behalf of the workers. The average returns in Mexico are around 11% annually and more than 5% in real terms. And with voluntary savings, anyone can get those returns with as little as MXN1 investment in their AFOREs.