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INTRODUCTION
The Institute of the National Housing Fund for Private Sector Workers (Instituto del Fondo National de la Vivienda para los Trabajadores) INFONAVIT is a financial institution whose basic objective is to provide mortgage credit in Mexico to low-income workers in private sector corporations.
INFONAVIT is a first-floor, social interest mortgage institution which grants mortgage credits to its beneficiaries at lower-than-market interest rates and without intermediation of financial agencies, namely: banks and nonbank banks (Sociedades Financieras de Objeto Limitado; SOFOLES).
INFONAVIT was created by presidential decree in 1972 1 and has a tripartite management system with equal representation of the labor sector, employers' sector and the federal government. Approximately 3,700 employees work for INFONAVIT; of which 2,000 are at the central offices and 1,700 are distributed throughout the country's 32 state delegations.2
In just over 26 years of existence, INFONAVIT has granted mortgage loans to more than 1.8 million workers (see Figure 1), and current estimates are that nearly 10% of the Mexican population lives in a house purchased through INFONAVIT credit.
THE NEW PENSIONS SYSTEM
INFONAVIT is part of the Retirement Savings System (Sistema de Ahorro para el Retiro; SAR). Through this new pensions system, each worker is assigned an individual account whose balance is broken down into three sub-accounts:
1 Retirement.
2 Housing.
3 Voluntary deposits.
The balance of the retirement account is comprised of the compulsory bi-monthly deposits-made by the employers, the federal government and the worker himself-at an approximate rate of 6.5% on the worker's base salary3, plus the corresponding yield.
The balance of the housing sub-account is made up of the compulsory payments to be made by the employer every two months at a 5% rate on the worker's full pay (i.e., nominal wage plus benefits) with an upper limit set currently at 17 "times the minimal wages" in Mexico City (times minimal wages" is abbreviated by its Spanish acronym vsm = veces salarios minimos)4, plus yield. The upper limit increases in 1 vsm yearly up to a ceiling of 25 vsm.5 Lastly, workers may choose to make deposits into their voluntary savings sub-account.
All balances in private sector worker's housing sub-accounts go to make up the National Housing Fund (Fondo Nacional de la Vivienda), which is managed by INFONAVIT