**Potential Pension Payment Default Looms in 2025 Without Issstecali Reform: Moreno Mexía**
In a recent statement, the Secretary of Finance, Marco Antonio Moreno Mexía, highlighted a critical financial issue facing Baja California. He warned that if no reform is made to the pension system managed by Issstecali, the region could face a pension payment default in 2025. “This will be detrimental to workers and create a governance crisis,” he noted.
The pensions deficit has escalated dramatically in the past five years due to increased life expectancy and the impact of the COVID-19 pandemic. This year, the shortfall stands at approximately 7 billion pesos. For instance, the city of Mexicali is required to allocate 813 million pesos to cover the deficits of municipal workers, exceeding the 750 million pesos expected from local property taxes.
During a government briefing, a group of bureaucrats protested, insisting, “No to the reform, debtors must pay.” However, Moreno Mexía believes that even if municipalities like Tecate and Ensenada pay their combined debts of 6,500 million pesos, it would only cover one year’s deficit.
Moreno Mexía revealed that the reform proposal is not ready yet; an external audit is being awaited to pinpoint necessary system changes. He denied accusations from a political representative claiming that the Governor had been “irresponsible” by announcing a reform without a concrete plan or consensus.
In response to questions about municipal debts, Moreno Mexía explained that Tecate’s and Ensenada’s arrears stem from prior administrations. He also stated that trust employees’ compensations are not being taxed as they aren’t covered under the pension system, which would yield a negligible amount.
He assured that the reform would not reduce retirees’ current pensions, noting that some workers earn between 1 and 3 million pesos annually. A mechanism involving state participations might be established to ensure municipalities fulfill their financial obligations.
Moreno Mexía acknowledged the need for significant changes in Issstecali’s financial model, emphasizing better governance and a clear mandate for director credentials. He pointed out the ineffectiveness of previous reforms, as historical issues within the system were left unresolved.
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**Concerns Over Pension Sustainability in Mexico Grow**
Across Mexico, pension sustainability has become a pressing issue, with several states grappling with rising deficits and the burden of sustaining pension payments. Similar to Baja California’s situation, many Mexican states are experiencing increased financial strain due to an aging population and past fiscal mismanagement.
Experts suggest that unless comprehensive reforms are undertaken nationwide, more states could face pension defaults in the near future. The government is urged to implement strategic measures focusing on enhancing the efficiency of payments and ensuring better financial planning to address long-term sustainability. Such reforms are imperative to protect the pensions of an increasing number of retirees across the country.