Table 1. Main Characteristics of the Private-Sector (IMSS) Social Security System PAYG and PRA Plans.
| Before 1997: PAYG | After 1997: PRA | |
|---|---|---|
| Normal retirement age | 65 | 65 |
| Early retirement age | 60 | 60 |
| Minimum years of contribution | 10 | 25 |
| Normal-retirement social security benefit | Percentage of average wage of the last five years before retirement | Annuity based on balance of PRA |
| Early-retirement benefits | A reduction of 5 percent for each year below the normal retirement age | No reduction |
| Guaranteed minimum pension | Minimum wage | Minimum wage |
| Indexation of benefits | Minimum wage | Inflation |
Notes: PAyg refers to the pay-as-you-go system and PRA to the personal retirement account plan. The PRA system allows early retirement even before age 60, but the annuity must be higher than 30 percent of the minimum pension guarantee. The minimum wage varies by region. There are three determined regions. The guaranteed minimum pension and the indexation of benefits are computed with the minimum wage for the Mexico City region.
Sources: IMSS (1994, 1998)