09 / 10 / 25
General Provisions for Retirement Savings Systems
MEXICO CITY, MEXICO, September 10th, 2025
The recent publication of the General Financial Provisions for Retirement Savings Systems (Disposiciones de Carácter General en Materia Financiera de los Sistemas de Ahorro para el Retiro) (the “Provisions”) represents a regulatory change that is primarily aimed at strengthening corporate governance, financial risk control mechanisms, and ensure greater functional and hierarchical independence between technical and operational areas within Specialized Retirement Fund Investment Companies (Sociedad de Inversión Especializada en Fondos para el Retiro or SIEFOREs), operated by Retirement Fund Administrators (Administradora de Fondos para el Retiro or AFOREs), with the main objective of ensuring the security, liquidity, and profitability of the resources managed in the system.
One of the most relevant aspects of these Provisions is the reconfiguration of the role of the Board of Directors, with an emphasis on the role of Independent Directors, who transcend their advisory role and assume direct responsibility for approving policies critical to the operation of SIEFOREs. These Independent Directors must now approve, among other things, fundamental policies ranging from the limits and procedures for risk management proposed by the Financial Risk Committee to the business continuity plan and disaster recovery plan. This last obligation introduces an operational and technological component that goes beyond strict financial matters, as it requires the evaluation of the institutional response capacity to critical events that could affect both the operation and the assets under comprehensive management of the investment portfolios. They must also authorize and supervise the frequency, content, and delivery of reports prepared by the Comprehensive Risk Management Unit (Unidad Integral de Administración de Riesgos or UAIR). They must also be informed of any turnover in key positions within the organization and actively participate in ongoing training programs, which reinforces the professionalization of the governing bodies but at the same time increases their operational workload. The aim of this is to enable comprehensive planning and implementation of any changes resulting from staff turnover.
This regulatory reinforcement, however, is not without practical complications. The Law on the Retirement Savings Systems (Ley de los Sistemas de Ahorro para el Retiro) requires a minimum of two independent directors on the boards of directors. If one of them were to be absent, it would no longer be possible to achieve the majority required to approve strategic or urgent decisions, which represent a significant operational risk. In contexts of market volatility or disruptive events, if there are no previously appointed alternate directors, this could compromise the institution’s ability to react.
In addition, the new Provisions incorporate more rigorous requirements for administrators’ officers, especially those who hold key positions in the areas of investment, risk, and operations, particularly with regard to their suitability, certification, and experience. In the context of investment portfolio management, the new requirements could lead to a temporary reconfiguration of decision-making, particularly if the certification of a key officer is about to expire. This situation may affect both operational continuity and the speed with which investment strategies are executed. Administrators should anticipate these changes and design transition plans that ensure operational stability and regulatory compliance.
On the other hand, the new regulations introduce a principle of independence between the investment areas and the areas responsible for controlling and managing risks. The Head of the Risk Area is required to have operational and hierarchical independence from investment and operational functions. This separation, although desirable from an internal control perspective, can create friction in day-to-day coordination, especially when markets demand agile and well-informed decisions. In this regard, it will be crucial for investment companies to establish efficient communication channels and defined collaboration protocols, supervised by Independent Directors, who must determine the frequency with which these interactions occur and ensure that there are no blockages that affect portfolio performance.
From a broader perspective, the Provisions also incorporate stricter criteria for investment in structured instruments, with greater requirements in terms of disclosure, evaluation, and minimum elements that must be included. These include the creation of a specialized subcommittee and a channel for receiving and evaluating investment proposals, the obligation for the manager to co-invest two percent at the structured instrument level, and the requirement to document and approve any exceptions to the above by a majority of independent directors, among others.
These provisions seek to protect workers’ assets and avoid excessive exposure to complex instruments or those that are difficult to value. However, their implementation requires a thorough review of internal investment policies and the development of new analysis methodologies, which may involve an institutional learning curve and higher operating costs, particularly for smaller administrators or those with less developed structures.
On a final note, the new Provisions represent a significant step forward in terms of transparency, professionalization, and control in the retirement savings system. However, their impact on comprehensive portfolio management and risk administration will depend on the ability of administrators to adapt to a more complex and regulated environment, as well as on the ability of independent directors to adapt to their new responsibilities and implement them without affecting resource management or putting investments at risk in the face of sudden market movements.
The full article was made in collaboration with Lexlatin, and you can find the original article in Spanish herein: LexLatin | Las disposiciones financieras de la reforma a las Afores en México
All the information placed in this article and the rights of distribution belongs to @Lexlatin.
