A still young population and modest public pension spending, but a three-tier system — a universal pension from age 65, individual Afore accounts, a new top-up fund — under pressure from informality, ageing and a tight 2027 budget.

Spending still modest. According to the OECD's SOCX database, public cash old-age and survivors' benefits amounted to 5.3% of GDP in 2023. ⚠️ This OECD measure is not the Eurostat (ESSPROS) one used for EU countries: the two cannot be compared. The 2027 draft federal budget earmarks about 2.48 trillion pesos for pension payments (around 6% of GDP according to the press) — a different, budgetary scope.

A young population, but one that is ageing fast. People aged 65 and over made up only 8.5% of the population in 2025 (World Bank), against more than 20% in Europe or Japan. But fertility has fallen below replacement level, to 1.89 children per woman in 2024.

Late exits, a reflection of informality. The average age of exit from the labour market reached 67.8 for men and 65.7 for women in 2024 (OECD, Pensions at a Glance), above the legal age of 65. This owes less to a policy for older workers than to the lack of an adequate pension for many informal workers.

First tier: the universal pension. Enshrined in the Constitution in 2020, the Pensión para el Bienestar de las Personas Adultas Mayores is paid to everyone aged 65 and over, with no contribution requirement; the Secretaría del Bienestar puts it at 6,400 pesos every two months in 2026. Its approved 2026 budget was 526.5 billion pesos. It is complemented by the Pensión Mujeres Bienestar for women aged 60 to 64, extended by age bracket since its launch in late 2024.

Second tier: individual accounts. Since the 1997 law ("Ley 97"), private-sector employees insured with the IMSS contribute to individual accounts managed by the Afores; the generation insured before July 1997 keeps the defined-benefit scheme ("Ley 73"). The 2020 reform gradually raises contributions from 6.5% to 15% of wages by 2030, mostly paid by employers, and cut the required weeks of contributions to 750 in 2021, a threshold that rises by 25 weeks a year — 875 in 2026, 1,000 in 2031. According to CONSAR, the Afores managed 8.3 trillion pesos at end-2025, or 23.8% of GDP; the maximum fee is set at 0.54% in 2026.

Third tier: the Fondo de Pensiones para el Bienestar. Created in 2024, it tops up to 100% of the last wage the pensions of low-income "Ley 97" and ISSSTE 2007 retirees, partly funded by the dormant Afore accounts of people aged 70 and over. At end-June 2026, its balance stood at 61.6 billion pesos, after 5.94 billion had been returned to 188,043 holders who claimed their savings. By end-August 2026, 610.5 million pesos in top-ups had been paid to 8,665 people, 92% of them IMSS retirees.

A tighter 2027 budget. The draft presented in September 2026 earmarks 543.5 billion pesos for the pension of people aged 65 and over, +3.2% in nominal terms after +8.9% in 2026 — roughly flat in real terms, according to Bloomberg Línea and Expansión. The universal pension would take up more than half of social programmes, which would exceed one trillion pesos. The bill still has to be passed by the Chamber of Deputies.

The "Afore generation" faces its entitlements. The first retirees fully under the individual-account system are reaching retirement age. A study cited in August 2026 estimates that 76% of this generation may not meet the conditions for a contributory pension for lack of contribution weeks — a risk heightened by the threshold rising towards 1,000 weeks.

Sustainability under debate. Supporters of the current model see it as a universal safety net that has reduced old-age poverty; its critics point to the growing weight of the universal pension and of the "Ley 73" transition in a strained budget, and to the funding of the Fondo through non-recurring resources. In the Senate, a proposal would tie part of Afore fees to their returns; its fate was unknown in early November 2026.

Open questions. Three issues will shape the period: (1) extending contributory coverage in a half-informal economy; (2) funding a universal pension whose cost follows ageing; (3) guaranteeing adequate pensions to the first Afore generation.

On the same OECD measure (SOCX), Mexico spends little on its retirees, but its population is much younger.

Three lessons. (1) Spending: modest. At 5.3% of GDP (2023), it remains below the United States (7.3%, 2023) and close to Canada (5.9%, 2022), above Korea (3.8%) and Australia (3.4%, 2022), where mandatory private schemes or a recent public scheme weigh on the comparison.

(2) Exit age: among the latest. At 67.8 for men, Mexico is ahead of the United States (67.3) and Korea (67.4), well ahead of Australia (64.9); among women, Korea (69.6) remains ahead.

(3) Demography: a window that is closing. With 8.5% of people aged 65 and over, against 18 to 20% among its peers, Mexico still has a demographic margin, but its fertility of 1.89 heralds rapid ageing.