The Center for Economic and Budgetary Research (CIEP) estimated that the states spend double what they report on pensions, because in 2021 they spent 38,000 million pesos, an amount higher than the 19,000 million reported in the Public Account of the entities federative.

It is not that the states invent the resources. State and municipal laws allow state governments and even autonomous universities to have their own pension schemes. What is not legal is that the states are not effectively reporting the final expenditure on pensions”, commented Alberto Pérez, coordinator of Public Finances of the CIEP.

In the presentation of the report Local public finances: towards a new fiscal coordination, it was reported that state spending on pensioners represents 3% of federal spending on pensions, however, in some cases, the Federation has to intervene.

“With the issue of state pensions, it is not clear who is responsible. Many times these pension schemes are created, but they do not have a source of financing and end up being rescued by the Federation”, said Alejandra Macías, executive director of the Center for Economic and Budgetary Research.

Specialists from the CIEP argued in the report that higher spending on pensions reduces the fiscal space of the states, since as part of the “unavoidable expenses” with which the fiscal space is calculated, an increase in the money allocated to pensions would decrease the capacity of state governments to offer services to their population.

Meanwhile, pensioners from local schemes enjoy more benefits such as higher pension amounts, lower minimum retirement age or even without it being defined, as well as fewer mandatory years of service (from 15 to 35 years).

Meanwhile, there are states such as Sinaloa, Michoacán, Puebla, Sonora, Nuevo León, among others, where it is possible for state or municipal government workers to retire with an amount equivalent to 100% of their last salary.

Given this, the expenditure per pensioner demonstrates the inequality that exists in the category. In 2021 alone, the lowest spending per individual was 122,000 pesos per year and the highest was 336,000 pesos.

The CIEP emphasized that in most cases, states and municipalities have pay-as-you-go pensions, which means that their financing falls on local budgets, which can be from their own income, but to a greater extent comes from federal spending.

Lack of transparency in institutions

The CIEP denounced that due to the lack of transparency of local institutions, the information to prepare the report was obtained through 209 transparency requests to states, autonomous universities and the most populous municipalities in the country.

“Of the 209 requests, we only asked the three most populous municipalities of each federal entity, if we replicate this exercise for all the municipalities of the country, the gap would be higher (…) this should be a central point that must be addressed by the states and the Federation”, commented Alberto Pérez.

The discrepancy between the resources reported by the Public Account and those found in the transparency requests suggest that the records of pension and retirement spending of the National Council for Accounting Harmonization are not managing to provide the necessary information to know the magnitude of the expense, the experts agreed. .

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