Mexico is a country that attracts workers from all over the world, and it is important that those who come to work here understand the institutions and benefits that are part of the Mexican labor system. Two of the key entities in this system are INFONAVIT (Instituto del Fondo Nacional de la Vivienda para los Trabajadores) and AFORE (Administradora de Fondos para el Retiro). Here we explain what they are how they work, and why they are relevant for foreign workers.
INFONAVIT: Facilitating Homeownership
INFONAVIT is a Mexican governmental institution whose main objective is to help workers acquire housing. Each month, employers contribute a percentage of their employees’ salaries to INFONAVIT, which constitutes a housing savings fund. Foreign workers working in Mexico also benefit from this fund.
The money accumulated in INFONAVIT is used to grant mortgage loans to workers, enabling them to buy, build or improve their homes. These loans are low-interest loans and can be used to purchase property in Mexico.
AFORE: Preparing for Retirement
The AFORE, on the other hand, is a retirement fund manager. Its main objective is to help workers accumulate savings for their retirement. As with INFONAVIT, both employers and workers, including foreigners, contribute monthly to an individual account in the AFORE.
The money in the AFORE account is invested in different financial instruments in order to make the worker’s savings grow. When a foreign worker decides to retire or return to his or her country of origin, he or she can request the return of these funds or leave them invested for future retirement in Mexico.
How These Contributions Are Discounted
INFONAVIT and AFORE deductions are made automatically through the employee’s payroll. These deductions are based on a percentage of the employee’s salary and are mandatory for both Mexican citizens and foreign workers working in the country.
Recovery of Funds
One of the advantages of this system is that foreign workers who accumulate funds in INFONAVIT and AFORE can recover these funds once they decide to retire from working in Mexico or return to their country of origin. The way in which these funds can be accessed is through the judicial process by filing a labor lawsuit.
In summary, INFONAVIT and AFORE are essential components of the Mexican labor system that benefit workers, including those of foreign origin. Contributing to these funds can be a smart investment for both housing and retirement, and workers have the option of recovering these funds when needed. As a foreign worker in Mexico, it is critical to understand how these institutions work and how they can impact your long-term financial well-being.
At Vega, Guerrero & Asociados, we support foreigners who wish to obtain the recovery of their contributions when they leave Mexico, as well as those who at some point in their lives have worked in Mexico, and therefore, have contributed to such accounts.