1. Asociación Mexicana de Administradoras de Fondos para el Retiro, A.C. INVERCO Madrid, España April 14, 2000

2. 3Change in Demographic Structures. Higer life expectancy in the population. 3 Heavy Financial Burden of the System on GDP, That reducing the ratio of contributors to pensioners and Increasing the cost of pensions. 3Pasive rol from the affiliates, no descition about their benefits and the way to accept them in the System. INVERCO Pay As You Go System

3. INVERCO Pay As You Go System Increase in the Age of the Population Reducing the Ratio of Contributors to Pensioners Control of the Birth Rate, Higer Life Expectancy

4. INVERCO Pay As You Go System ChileMéxicoPerúUruguay 1960 6.29 21.1362.15 3.9 1980 2.18 12.8710.15 1.53 Ratio of Contributors/ to pensioners

5. INVERCO Pay As You Go System 3 Management Inefficiency, given by the Centralized Public Administration of the Systems. T Lower Quality in the attention and burocratic Process. T Acumulated Reserves invested in bad instruments and used to finance Government Debt and Gobernment Programs. Lack of Transparency in the Investment Decision. 3 Diminishing the Confidence in the State Financial Capacity

6. INVERCO Pay As You Go System 3Higly Dependence from State Financing, together with the economic Crisis of the 1980´s, Result in strongest pressures to Public Finance and Inflation. T Higer Costs in Social Security. 3 Pension are not adjusted by inflation indexation. 3This Situation Generate a Tax Effect, because the Workers’ do not consider the Contributions as part of their Income.

7. INVERCO Pay As You Go System 3 Strucutral Problems of the regimes. TIncompatibility Between Contributions, Future benefits and Pension Parameters. TPensions’ Values are no related with the contributions and this created bad incentives and stimulated employer´s evasion and Payments Delays. 3 Unemployment Problems and Small Coverage in the Systems.

8. INVERCO Pay As You Go System Pay As You Go System or Defined Benefits unemployment Increase Diminishing in the Contributions Financial Deficit reserves Accumulation

9. INVERCO Individual Capitalization Systems 3Pensions Level is Directly Related to the Individual Effort. 3Fredoom to Chose the Institution and the Way in what recive the Social Benefits. 3 System Competitiveness. Lower Cost for the Affiliates.

10. INVERCO Individual Capitalization Systems 3Equity in the System. El Pensions Level is more Related with the workers´ Effort that with the State Financing. 3Incentivs to Incorporate the Informal Sector of the Economy, as consecuence of the Reduccion in the Tax Effect. Growth of the Formal Economy.

11. INVERCO Individual Capitalization Systems 3Allow that the Pensions will be adjusted according to Inflation Rates. 3Has a Favorable Influence in the Savings and the Investment Process, so, this have a good expectation in the About the Economic Growth. 3Is an Incentive to increase Voluntary Saving and Reduce the Employer´s evasion.

12. INVERCO CONCLUSIONS 3The Traditional Systems Pay As You Go Showed the Neccesity of Reform It. 3 Los The Individual Capitalization Systems are until now the best alternative to Strengthen the Social Systems of each Country, granted a scheme that will be competitive, solid, homogenous, dinamic, efficient and financial viable.