| Headline: Pension funds face crisis of low returns Source: Euromoney Date: January 2002 Author: Robin Emmott Mexico
Today, as in the 1990s, 89% of pension funds in Mexico are invested in government bonds. But with economic stability now a central part of president Vicente Fox’s policy agenda, interest rates have reached 30-year lows of around 7%. As a result, real returns on the bonds are now 3%. This dramatic fall has prompted Consar, the pension fund regulatory body, to bring in a new investment regime, the first major change since the country’s pension fund system was privatized in 1997. The system has assets of $23 billion. “We admit the old regime has become obsolete,” says Consar spokesman Hector Alcudia. “But there are new ways for generating returns on the savings of the country’s workers.” | |||||||||||||||||||||||||||||||||||||||||