The central American country has brought in a system of individual defined contribution accounts for both federal government employees and private sector workers.

The intention is to gradually harmonise the rules covering all pension plans with the aim of establishing a national pensions system for all Mexicans.

OECD general secretary Angel Gurría noted the role played by Mexico’s pensions regulator CONSAR, which has helped improve the efficiency of the pensions system and allowed it to become a tool to promote inclusion and wellbeing.

But he warned contribution rates would need to rise if retirement incomes in excess of 50% of final salary are to be guaranteed.

“The new system of defined contributions will be successful only if compulsory contributions are increased and a pro rata mechanism introduced to smooth the transition from the ‘old’ to the ‘new’ defined contribution pension system,” Gurría said.

The OECD is also urging the Mexican government to increase the level of assistance it provides to older citizens.

Mexico has the second highest rate of senior citizen poverty in the OECD for the group, which makes up 30% of Mexico’s population.