Mexico reformed its pension system in 1997, transforming it from a pay as you go (PAYG), defined benefit (DB) scheme to a fully funded, private and mandatory defined contribution (DC) scheme. The reform was modeled after the pension reforms in Chile in the early 1980s, and was a result of recommendations from the World Bank.
Participants in the Mexican system choose from a variety of private pension fund managers called Administradores de Fondos para el Retiro (AFOREs). AFOREs are responsible for managing individual accounts and investing savings in the pension funds called Sociedades de Inversion Especializadas para el Retiro (SIEFOREs). SIEFOREs are separate legal entities with their own Board of Directors, and segregated assets from AFOREs.