Mexican Pension Reform Proposal-A Positive For Investor Confidence

• Fitch Solutions expects that the Mexican government’s recent pension reform proposal will be approved in the months ahead, increasing required employer contributions and reducing weeks of contributions of workers.
• While this proposal will increase the costs of employing formal workers, it has backing of the business community and is less radical than some had feared, which will support investor sentiment.
• The proposal is also a political victory for Mexican President Andrés Manuel López Obrador, though pressures stemming from Covid-19 and security issues will limit any boost in his political capital.

(Source: Fitch Solutions)