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How Do Management Fees Affect Retirement Wealth Under Mexico’s Personal Retirement Accounts System?

Emma Aguila (), Michael Hurd () and Susann Rohwedder

No WR-1023, Working Papers from RAND Corporation

Abstract: In 1997, Mexico transformed its pay-as-you-go social-security system to a fully funded system with personal retirement accounts, including management fees. This paper examines changes in retirement wealth resulting from this new system. It found management fees drained a significant proportion of individuals' retirement wealth and had the effect of increasing the number of persons claiming a government-subsidized minimum pension, particularly from the time the system was introduced in 1997 until adjustment to management fees in 2008. Since 2008, retirement wealth accumulation has been similar to that of the previous system.

Keywords: retirement wealth accumulation; retirement fund management fees; social security (search for similar items in EconPapers)
JEL-codes: G23 H55 J32 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2014-01
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