Mexico had its "miracle" in the 1970s and 80s when its population grew consistently by 3.5 percent to reach its current 103 million. However, population growth is now at 0.99 percent, and fertility rates have decreased from 5.7 children per woman in 1976 to 2.2 in 2006. A surplus of youth is no longer something Mexico can boast of: ten percent of its population is currently in retirement, and, in the next three decades, this figure will rise to 28 percent.
Meanwhile, as a growing proportion of Mexicans heads towards retirement, the government has opened the market for supplementary retirement provision products. Allianz Mexico was ready.
Demographics drive new Allianz Mexico life product
José de Caso sees great scope for retirement products in Mexico
Quick response to regulatory change
Allianz Mexico moved quickly to take advantage of the new situation. With the support of experts from Allianz Life of North America, in a matter of months a project team prepared Allianz Mexico's new retirement product, OptiMaxx, for the market.
"We received a license from the government to operate in the life market in October 2006," said José de Caso Rivero Borell, marketing manager, "and we had our OptiMaxx product launch on December 11."
Encouraging start for flexible product
It’s early days for success stories, but the product is off to an encouraging start – particularly amongst Allianz Mexico’s employees, where 15 percent have so far bought in. De Caso attributes this to the flexibility of the product.
"It’s a savings product that is an attractive way to start a retirement portfolio, even for young people just entering the workforce," he says. It’s also got flexible options: it is possible to put a hold on OptiMaxx payments; for example if financial resources are needed to handle a mortgage. Contributions can be resumed again when other financial commitments ease.
The age profile for the product is wide: Allianz Mexico is seeing sales in every category up to age 60, with the 35 to 40 segment particularly strong.
Demographics stimulate demand for retirement products
De Caso sees great scope for retirement products in the Mexican market, not just because of the growing numbers reaching the retirement age of 65, but because life expectancy in Mexico has jumped from an average of 64.5 in 1975 to 82 in 2006. More people need pensions, and need them for longer.
In 1997, the pension system in Mexico changed: retirement funds are now managed by private government-regulated companies called AFOREs. De Caso notes that although all workers must have an AFORE plan, it will only pay between 25 to 30 percent of the last salary. This is not a sufficient income for anyone who wants to maintain their lifestyle. The OptiMaxx product can help retirees bridge this income gap.
De Caso expects a further market liberalization – and even more competition. He and his colleagues are well prepared: An increasing numbers of agents – over 100 to date – are being trained to sell OptiMaxx, and the next round of retirement products is already in the pipeline.
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