Sometimes companies have the need to hire highly experienced personnel. However, these individuals are often enjoying a pension for early retirement or old age.
This situation makes companies hesitate about whether it is viable to proceed with the hiring, and therefore, whether it would result in the cancellation or suspension of the pension they are enjoying.
The labor legal framework in Mexico includes both the Early Retirement Pension (a benefit granted to insured individuals who are deprived of their work and cannot find another job, starting at the age of 60) and the Old Age Pension (a benefit provided to individuals who, due to their natural aging process, are at a disadvantage to continue working, starting at the age of 65). It can be inferred that once someone receives a pension, they can no longer work. However, enjoying a pension does not mean there is a prohibition to continue with one’s work life. Furthermore, neither the Federal Labor Law nor the Social Security Law imposes any restrictions regarding the hiring of workers who have a pension for early retirement or old age.
Despite the above, employers should consider the following points when hiring retired employees:
- If they retired under the 1973 Law, there are no restrictions on their hiring or social security coverage. Therefore, the pension they receive should not be suspended under any circumstances. This is because their registration with the company will be under the 1997 Law, which is a different scheme from the one they enjoy in their retirement.
- If they retired under the 1997 Law, the only scenario in which the pension payment is suspended is if it is a guaranteed minimum pension. This refers to insured individuals whose accumulated resources for their pension were insufficient to contract a life annuity or programmed retirement, but who met the corresponding requirements.
The company should register the retired employee with the Mexican Social Security Institute (IMSS), indicating their pensioner status. This is not only mandatory but also reflects savings for the company, as they will not have to contribute the pension-related fees established by the Institute.
If you require assistance regarding the hiring of retired employees, please do not hesitate to contact the Labor Department team at Vega, Guerrero, and Associates.
