The IMSS defrauds pensioners in Yucatan

* In this state alone, Social Security authorities are making approximately $231,813,360 pesos per month “disappear” from workers’ pensions, by quoting payments in UMAs [Units of Measure and Update] and not in minimum wages. When a person entitled to social security benefits retires on a pension, his salary earnings are quoted in Units of Measure and Update, which are almost 20% lower than the Minimum Wage

* This is unconstitutional and violates the human rights of the worker. The worker can demand retroactive payment. The monthly income in UMAs would be of $12,673.50 and in minimum wages it would be of $15,402.00, that is, there is a difference of $2,728.50

* If there are approximately 7 million pensioners in Mexico, the Social Security authorities are making approximately $19 billion “disappear” per month. UMAs are only used for the payment of obligations such as fines, Infonavit [National Worker’s Housing Fund Institute] credits and personal deductions and the pension must be quoted in minimum wages, as decreed by the Supreme Court.

An extremely serious social injustice prevails in Yucatan and in all of Mexico because Social Security authorities, feigning ignorance, pension workers basing the daily quota in UMAs, that is, Units of Measure and Update, which are lower than the Minimum Wage received by an employee.

The foregoing was decreed by the Supreme Court of Justice of the Nation (SCJN); that is, when a person decides to retire, at the moment in which the daily income must be stipulated, it must be based on the Minimum Wage, and it is unconstitutional that the Social Security authorities use units of measure and update as its basis.

However, the rights of 7 million pensioners in Mexico are being violated because, with fraudulent intention, Social Security authorities do not comply with this jurisprudence issued by the Supreme Court and, if the beneficiary intends to file suit in order for his rights to be respected, he obviously has to cover the expense of a lawyer, in addition to this being a cumbersome process, like all litigation.

In order to request the payment of the pension based on the minimum wage from the IMSS [Mexican Social Security Institute], the lawyer charges five thousand pesos and to file suit before a court, another 5 thousand pesos.

This is why many pensioners opt for leaving things the way they are, because they have no other option, as they lack the resources to bring this injustice to a legal process.

It is important to emphasize that Social Security authorities fraudulently perpetrate these injustices, because when a person goes there to conduct the process for his pension, they only tell him the requirements for the process, but at no time do they tell the beneficiary of all of the benefits he has a right to.

That is, at no time do they specify that he has the right to an extra percentage in his pension if he is married or if he has a child that is still in school; obviously there are some requirements for this, but by law and obligation, Social Security authorities should inform the beneficiary of these benefits. However, they prefer to omit this information in order for the beneficiary’s pension to be lower than the one he should really receive. It is granted only if the beneficiary asks for it.

If you have a wife or a concubine, you have a right to 15% additional support, if you have a daughter who is in school, 10% of additional support is added, up until she turns 25, if she is still in school.

The unfortunate thing about this situation is that when you try to reason with the directors of the delegation they give you the runaround, they treat you as if they were doing you a favor and they finish off by saying “do whatever you want.”

If you insist on fighting for your rights, they see you as a troublemaker and they entangle you with explanations of technical terms that obviously are not understood by any pensioner, to finally leave you in the same situation.

If all pensioners were aware of their rights and requested the payment of these benefits, this would cause a financial gap in the IMSS and the ISSTEY, because payment is retroactive.

The Unit of Measure and Update (UMA) may not be used to determine the daily quota or the payment limitation of a pension,  given that it is a benefit of a labor nature based on the Minimum Wage as determined by the jurisprudence issued by the Supreme Court of Justice of the Nation (SCJN).

Thus, the Unit of Measure and Update (UMA) may not be used to determine the daily quota or the payment limitation of a pension,  given that it is a benefit of a labor nature based on the Minimum Wage as determined by the jurisprudence issued by the Supreme Court of Justice of the Nation (SCJN).

Given the above, workers manifested their disagreement before the 18th Collegiate Court in Administrative Matters of the First Circuit to make their pensions effective, with the objective of preventing the use of the UMA to determine their pensions, as the value of the UMA is lower than the value of the Minimum Wage, which affects their income.

The Unit of Measure and Update was created in 2014 after the changes made by the Federal Congress to disassociate the Minimum Wage as the counting, base, measurement or economic reference unit in the federal, state or Mexico City laws.

This paved the way for the publication of the mechanisms under which the UMA would be determined in the Official Gazette of the Federation in 2016, as this was considered to be the first step for establishing policies for the recuperation of the purchasing power of the Minimum Wages, gradually compensating for the cumulative loss of over 70% for more than 30 years.

However, the SCJN recently published labor jurisprudence 2020651, establishing that “the retirement pension of the workers is a Social Security benefit derived from the employment relationship and based on the salary itself; in fact, in order to generate it and pay it, the fund created throughout the active labor life of the worker by means of dues from the received salary is the basis for it; these dues are capped at ten times the Minimum Wage. It is clear that this is a labor benefit”.

The minimum wage is currently set at 141.70 pesos per day throughout the country and at 213.39 pesos per day in the Northern Border, while the UMA, which is defined by the National Institute of Statistics and Geography (INEGI), is set at 86.88 pesos per day, but it must be updated in the next few months.

Additionally, the jurisprudence of the Court states that in all matters relating to the pension “the salary is the basis in regard to its amount, payment update or maximum limit, as these are matters that do not fall outside of its nature; additionally, to take the Unit [of Measure] and Update into account for these matters would denaturalize the pension and an economic factor that is foreign to the referred Social Security benefit, different from the salary and foreign to the pension would be used and this is not legally permissible.”

In this regard, Ricardo Martínez Rojas, partner at the “De la Vega & Martínez” Firm, said that “the Social Security Law and the complete financial structure of the IMSS have always been based on minimum wages. In fact, the collection of the maximum due is set at 25 times the Minimum Wage and we must take into account that when a pension is paid, a part of the salary is being paid; this is why it is called social security dues base salary.”

He added that the worker makes his contributions based on the Minimum Wage, this since the 1973 law.

Social Security is making over $19 billion “disappear”

With this ruling of the Supreme Court of Justice of the Nation, retirees will now receive 20% more in their pension, between the regulatory application of the UMA or the Minimum Wage.

Some retirees may find their pensions increased by up to 20% due to the decision by the Supreme Court of Justice of the Nation (SCJN) of invalidating the calculation of pensions based on the Unit of Measure and Update (UMA).

This after the Supreme Court of Justice of the Nation (SCJN) determined in a jurisprudence published on September 20, 2019, that the UMA cannot be used for the determination of the daily quota or the higher limit for the payment of a pension. The court concluded that, since it is a benefit of a labor nature, it must be calculated based on the Minimum Wage (SM). This is established by Constitutional Article 123, which states that “the minimum wage cannot be used as a unit of measurement for purposes unrelated to its nature”; thus, pensions would easily fall within this scope.

In accordance with a comparison made by the Social Security Commission of the Senate, the difference between a pension based on the UMA and one based on the SM is of almost 20%. If we take  an average pension of 5 minimum wages as a basis, the monthly pension in UMA would be 12,673.50 pesos. Based on the minimum wage, it would be of 15,402 pesos. That is, there is a difference of 2,728 pesos and fifty cents.

Now, if we take into account that there are approximately 7 million pensioners in Mexico, we find that the Social Security authorities are making around 19,099,500,000.00 disappear per month, as if by magic.

In the case of Yucatan, there are more than 82 thousand IMSS pensioners and around 2,960 pensioners from the State Government, belonging to the ISSSTEY [Institute for Social Security and Services for State Workers, Yucatan]. That is, there are around 84,960 retirees.

Based on the previous example, the authorities in the state alone are making around 231 million 813 thousand 360 pesos “disappear” per month.

The Minimum Wage, which increased in January of this year to 141.70 pesos per day and to 213.39 pesos for the 43 municipalities that comprise the Northern Border Free Zone, has a value higher than that of the UMA. Therefore, when calculating some aspects of the pensions using the UMA, as dictated by the IMSS criteria, pensioners were negatively affected. That is why amparo proceedings were promoted.

The minimum wage will be used to determine the maximum limit of the Social Security Dues Base Salary (SBC). In turn, the SBC is used, among other things to determine the amount destined for Social Security and the limit for early retirement and old-age retirement. Therefore, the UMA should not be used for this purpose.

The president of the Social Security Commission of the Senate states that, in order to recover the purchasing power of the wages and, at the same time, ceasing to damage the well-being and dignity of the retirees, a restriction must be established to prevent the use of the UMA as a reference for these payments.

What is the negative effect?

It is simple: there is no logic in social justice when in your working life your earnings are based on the Minimum Wage and when you retire you do so based on the Unit of Measure and Update.

In the past, the State made the decision of using the Unit of Measure and Update (UMA) to calculate pensions because these units increased at a greater rate than the Minimum Wage; nevertheless, the Minimum Wage increased rapidly, leaving the UMA well behind in recent years, reducing the growth of pensions and, therefore, the purchasing power of a large part of those who became pensioners after 2016.

Thus, our legislation provides a pension system that enables workers, when they wish to retire, to have sufficient funds to allow them a minimum level of quality of life through a pension. This pension, in line with the Social Security Law, can be updated in case of old-age or retirement at an advanced age, and disability and incapacity can also be a motive for receiving a pension.

Every person entitled to receiving social security benefits or beneficiary has the right to have their pension quantified based on the Minimum Wage and not on the UMA, as it has been quoted in recent years by Social Security Institutions. However, to date, every beneficiary that wants to make this prerogative valid will have to hire legal assistance to achieve it.

However, it should be clarified that the “Executive Order Adding to and Reforming various provisions of the Political Constitution of the United Mexican States, on the de-indexation of the minimum wage” ruled that the minimum wage cannot be used as a measure or basis of reference for purposes unrelated to its nature, which is labor.

In this context, the Unit of Measure and Update is created as an economic reference, de-indexing the general Minimum Wage in force and, as of January 28, 2016, all references to it as a measurement parameter for purposes other than those related to labor must be made using the Unit of Measure and Update.

In accordance with this, it is undeniable that, regarding the determination of the daily pension quota, the parameter used for its calculation is the general Minimum Wage in force, because it is a labor benefit and not one of the other obligations and premises to which the Unit of Measure and Update applies.

Therefore, when claiming the payment of a pension, this pension must increase based on the general Minimum Wage in force, from the  moment in which the pension is granted and subsequently.

Since the retirement pension of the workers is a Social Security benefit derived from the employment relationship and based on the salary itself, in fact, in order to generate it and pay it, the fund created throughout the active labor life of the worker by means of dues from the received salary is used, capped at 10 times the minimum wage, it is clear that this is a labor benefit.

The National Human Rights Commission defines the minimum wage as “one of the rights of every person who works for a third party, through which he can enjoy a decent life. A person’s income must allow him to cover his basic needs in regard to food, housing, health, education, among others, and not only for himself, but also for his family, so, in that sense, this right is related directly with the enjoyment and satisfaction of various human rights”

Therefore, the Minimum Wage must be sufficient to cover these basic needs catalogued as the human right to a dignified life.

The purpose of minimum wages is to protect workers from the payment of unduly low wages. They can also be an integral element of policies destined to overcome poverty and reduce inequalities, including the disparities that exist between men and women, by promoting the right to equal pay for work of equal value.

De-indexation seeks to generate greater equality and growth in workers’ salaries.

This means that the Minimum Wage will cease to be used as a unit of measure, that is, it will no longer be the parameter for the determination of fines, fees, administrative sanctions, government procedures and contractual penalties established in minimum wages, which will entail that those items that are established based on minimum wages will be determined independently.

The Minimum Wage may not be used as an index, unit, base, measure or reference for purposes that are unrelated to its nature since the Unit of Measure and Update has been created for this purpose.

Its objective is establishing, through this de-indexation, that the bases are set for raising the purchasing power of the Minimum Wage without affecting prices or generating a higher inflation. That is, it seeks to moderate prices or prevent the rise of prices of products due to the variations in the Minimum Wage, but rather on the costs of production of the goods or services.

With this, it is expected that the National Commission on Minimum Wages (Conasami) will not have any obstacles to be able to increase the Minimum Wage significantly in coming years, thus giving Mexicans greater possibilities for personal economic growth despite inflationary phenomena that affect the national currency.

What to do in order to defend yourself?

It is important to know that payment in UMAs reduces salaries and pensions. It is unconstitutional, but it is done by Afores [Retirement Funds Administrators], Governments and Public Institutions.

Now, what should you do to get your pensions and salaries paid based on the Minimum Wage, as determined by the Supreme Court of Justice of the Nation, since it continues to be paid based on the Unit of Measure and Update (UMA), whose value is lower and decreases your income.

Well, any person who feels affected has the right to appeal, either before a tax court or before a Tribunal.

If appealing before a tax court, you can present your claim at any time and if you do so before a Tribunal you only have fifteen days that start at the time in which you receive the refusal from the Government Institution or public entity, IMSS or ISSSTE.

The first thing that those who decide to claim would have to do is to submit a document before the government Institution or public entity such as the IMSS or the ISSSTE, requesting the adjustment of your pension or  the collection of payment of some modality fundamentally of advanced age and old-age insurance, or conservation of rights.

Once the request is answered, from the moment in which this is made known to you, the time for you to be able to submit your claim starts running; if the answer in a negative or they take more than 30 days to answer, this is considered as a negative response and then an amparo applies.

If you resort to an amparo, you only have 15 days from the time in which the claimant is notified of the negative response to the request made to the institutions, including the IMSS or the ISSSTE.

Workers see their salary or their retirements and pensions or the amount of their benefits reduced when they are illegally paid in Units of Measure and Update (UMAs), because its value is less than that of the Minimum Wage.

It is pertinent to mention, as background, that in May, 2014, in Mexico City, the proposal for an increase of the Minimum Wage started being discussed, with the objective of starting a process for the recuperation of purchasing power.

In turn, a procedure was designed for the Minimum Wage, which was used as a reference for the payment of penalizations, fees, credit and benefit payments, not to be considered as a reference any longer .

On December five, 2014, the Federal Executive Power presented the bill for the de-indexing of the Minimum Wage before the House of Representatives; this bill was approved and published in the Official Gazette of the Federation (DOF) on January 28, 2016, which led to a constitutional reform and to the creation of the Unit of Measure and Update (UMA).

In this regard, we can say that there is a direct effect on the payment of pensions received by pensioners within the regimes of the 73 Law and in Transitory [Article] Ten of the IMSS and ISSSTE workers, respectively.

It should be recalled that, on January 25, 2017, the Director of the IMSS informed the Commission representing Social Security agencies that the Technical Council of the Mexican Social Security Institute had agreed to adapt the systems and procedures for the implementation of the Constitutional Reform that created the UMA, under the following criteria.

The IMSS will use the UMA for the payment of Social Security fees referenced to the Minimum Wage.

The lower registration limit of the Base Contribution Salary (SBC) will be the Minimum Wage since registration with the IMSS is prohibited below this limit.

The maximum  limit for the payment of dues referred to in Article 28 of the Social Security Law will be of 25 times the UMA.

In the case of workers paying dues to the ISSSTE who will be pensioned or will retire under the regime of Transitory [Article] Ten, the equivalent, up to a cap of 10 times the UMA, will apply.

It is imperative to point out that the application of these parameters is completely unconstitutional and illegal, it is just a question of whether the people that have these criteria applied to them will decide to exercise their rights by legal means; in this regard, a criterion by the Supreme Court of Justice was issued, which we reproduce in its entirety for your knowledge because of its importance:

“Pensions granted by the Institute for Social Security and Services for State Workers. The Unit of Measure and Update (UMA) is inapplicable for setting your daily quota.”

The aforementioned economic indicator, which came into force with the Executive Order Adding to and Reforming various provisions of the Political Constitution of the United Mexican States, on the de-indexation of the Minimum Wage, published in the Official Gazette of the Federation on January 27, 2016, is inapplicable as a reference for matters relating to retirement pensions, since, from the explanatory memorandum that gave rise to this constitutional reform, it is noted that it was created to be used as an index, unit, base, measure or reference to index certain assumptions and amounts unrelated to the nature of the Minimum Wage, such as the total of fines, contributions, the balance of housing loans granted by development agencies, among others.

Therefore, Minimum Wage and not the Unit of Measure and Update (UMA) is the economic indicator that applies to Social Security benefits, as a parameter for the determination of the maximum amount of the base contribution salary, to fix the daily quota for pensions in accordance with Article 7 of The Regulations for Granting Pensions to Workers Subject to the Regime of Transitory Article Ten of the Executive Order and, therefore the Law of the Institute for Social Security and Services for State Workers is issued.