Retirement and pension, we tell you what the differences are

You’ve probably heard the word retirement many times, but do you know what it means? This is an issue that very few give due attention to but if you still do not know what it implies and why it is important, we will tell you so that you can prevent thinking about the future.

Similarly, another of the words used for this topic is pension and many think that they refer to the same thing but they are two terms that are used by mistake as if they had the same meaning. Therefore, it is important to be informed to be prepared for any situation.

Thinking about retirement is important. Photo: Pixabay Pension

The first thing you have to know is that the pension is what a person receives after having reached the necessary requirements in terms of age and weeks of contributions and there are two regimes or laws under which the amounts of weeks needed are determined: Law of 1973 and Law of 1997. Depending on the one that corresponds to you, they give you a percentage of your savings or of the salary that you have had during the last years that you worked.

Each of these regimes has as a requirement different ranges of age and contribution so that you can be entitled to receive your money when your working life ends.

Retirement

Now, retirement is the process, which takes place naturally, through which the change from worker to retiree is made, all this when you have concluded your work stage, that is, retirement includes the pension, which it will be the money that is received when the time of withdrawal arrives. In general, it refers to the compensation you receive after having completed your work time.

On the other hand, in many cases retirement depends on the company where you worked or the union if it is the case. In fact, some have retirement plans, this as an additional benefit, but it is not mandatory.

What the Federal Labor Law (LFT) does indicate is that a pension is a right for all workers, so that retirement could be understood as an extra income to the pension so that you can enjoy your retirement.

If you are retired by your company, you will receive an additional amount at the end of your working life, although one of the requirements is that you meet the required age, it is not valid if you resign voluntarily or if you are fired earlier.

In short, the pension is something to which all workers in Mexico are entitled and retirement is an additional benefit that in many cases may depend on your company. If you want to prevent for your future, you could find out in your company if they have this plan.

More content about pensions and Afores in our Retirement section.

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