About one-sixth of the 2022 federal budget will be used to pay pensions as a record 1.17 trillion pesos (US $56.6 billion) will end up in the pockets of retired workers next year.

According to the 7-trillion-peso (US $338.8 billion) budget approved in the lower house of Congress last Sunday, the outlay on pensions will increase 6.2% in 2022 and represent 16.5% of the total budget.

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The 1.17 trillion pesos will go to retired government employees, including those who worked for state-owned companies such as Pemex and the Federal Electricity Commission (CFE), and other former workers covered by Social Security Institute (IMSS) and State Workers Institute (ISSSTE) pension schemes.

The federal government’s pension costs have been increasingly steadily in recent years, rising from 736 billion pesos in 2015 to just under 990 billion pesos in 2019 before breaking the 1-trillion-peso barrier for the first time in 2020.

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Ricardo Velázquez Luna, a pensions expert and general director of financial consultancy Asesores Patrimoniales, told the newspaper El País that the government’s snowballing pension costs are the result of “bad planning in the pensions system that wasn’t corrected until 1997.”

He predicted that pension costs will continue to grow over the next five to six years.

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