In Mexico, despite the fact that there are “multiple alternatives” for working people “contribute directly and voluntarily” for their retirement without the intermediation of an employer, only 6.8% of independent workers do so, according to the Inter-American Development Bank (IDB). Those who work in the digital platforms They make up one of the populations that is least accessing savings for their pension.
What happens in DiDi Mexico is an example of the challenge. In 2021, 74% of delivery men and women had a pension account, but 90% had not contributed to it in the last year. In the case of male and female drivers, 83% were registered with one of the Retirement Fund Administrators (Afore), however, 87% had not contributed for a long time.
“Ignorance about the retirement savings and behavioral biases, among other causes, have caused informal and self-employed workers to stay away from pension savings systems,” the report states. Saving without barriers: Lessons from the interventions of the Retirement Savings Laboratorypresented remotely.
This problem is regional. In Latin America and the Caribbean, less than half of working people are quoting for his old age, according to the IDB document. It is not surprising that in Mexico “only 1 out of 10 workers from the 40% of the population with the lowest income is saving for their pension”.
The pension systems they were designed more than 100 years ago, thinking of another family structure and jobs in which people depended on a single company, explained Oliver Azuara, senior economist in the IDB’s Labor Markets Division, when presenting the report. Unfortunately, pension schemes are not capturing that heterogeneity, he lamented.
And the pandemic “showed that millions of people are out of coverage.” In the digital age there are multiple occupations, the economist pointed out, to which those who lost their jobs due to the economic crisis unleashed by covid-19 have joined.
Again, Didi’s case exhibits this situation: the 60% of delivery men respondents “reported that the pandemic influenced their decision to use DiDi Food”, while the same was indicated by 29% of drivers.
Globally, 48% of those who started driving for Beat did so under pressure from the conditions in the pandemic, 59% use at least one other platform. Refering to contribution to your pension68% have an account, but 78% have not paid in the last month.
Progress, but not in all sectors
Five years ago, the IDB launched the Retirement Savings Laboratory in Mexico, Colombia, Chile and Peru. With this project they evaluated the implementation of different strategies “to increase the pension savings of the most disconnected workers in the region.”
In Mexico, the 63% of working people “it does not contribute to social security and, therefore, it does not have an automatic retirement savings mechanism”. According to the IDB, “this exposes them to inertia, in which any deviation from the current state is perceived as a loss; procrastination, thinking that ‘I’ll save tomorrow’; overoptimism, with ideas like ‘I’m sure I can continue working when I’m old’; and other barriers to saving that have been documented by behavioral economics.”
Since 2015, the National Retirement Savings System Commission (Consar) has promoted voluntary savings through multiple alternatives, highlights the IDB. One of those is the smartphone app AforeMobile and the 14 commercial networks, which offer the possibility of saving in more than 15,000 physical points in the country.
Those efforts “have resulted in a 500% increase in voluntary savings between 2013 and 2018.” But really “only 10% of the voluntary savings it is collected through physical collection points and, as of the third quarter of 2018, it is estimated that less than one in 100 affiliates has used the collection network for voluntary savings.”
In other words, those who are contributing to increase the amount they will receive upon retirement are doing so for institutional pathways or traditional, because perhaps they have a traditional and formal job.
To promote the voluntary retirement savings “in communities historically disconnected from pension systems and formal work,” governments must create a “deeper advisory” mechanism to explain how the system works and its benefits. “The main challenge is to develop a scalable and cost-effective mechanism for financial and pension education,” concludes the IDB.