Abstract

MIRANDA MUNOZ, Martha  and  FIGUERAS ZANABRIA, Víctor Manuel. A Look at the Contingent Liabilities of Old Age Pensions for Public Sector Workers Across Mexican States. Gest. polít. pública [online]. 2017, vol.26, n.spe, pp.125-155. ISSN 1405-1079.

In Mexico, contingent liabilities of state governments for providing old age pensions to public sector workers are usually not recognized in their financial statements (IMEF, 2004). In addition, a number pension programs for public sector workers in the states are currently in actuarial deficit (Farell, 2009) —the present value of expenditures in these programs is higher than the present value of revenues. This suggests states’ governments may not be prepared to face the payment of pension promises. This paper discusses how the main features of the current fiscal system are linked to the growth of contingent liabilities of states’ pensions. It also presents an estimate of the debt to public sector workers due to the payment of old age pensions following pension rules in the 32 states. Our methodology is inspired in Organisation for Economic Cooperation and Development (OECD) pension models. The results show that, on average, the cost of providing old age pensions to public servants is 18.2 times their last annual salary.

Keywords : pensions for public sector employees; old age pensions; government contingent liabilities; states’ governments; Mexico.