Population Aging in Mexico and the Replacement Rate of Old-Age Pensions in the Social Security Law after the 2020 Reform

The author presents a quantitative analysis of the projection of pension amounts based on the work life and monthly payments received. First, she reviews Mexico’s demographic transition regarding the pension system and the relevant reform to the Social Security Law in 2020; she determines the replacement rate, measured as a percentage of the pension vis-à-vis the last wage received, of the old-age pension of 239 pensioners and nine wages, starting with the base wage minimum deduction to the base wage of the highest deduction. Her main finding is that, even though the pension system is primarily determined by defined deductions, the 2020 reform pro-vides a higher replacement rate than the 1997 Law, favoring workers; however, it does not match the replacement rate that existed in the definite benefits system stipulated in the prior law passed in 1973.