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Mexican President AMLO Seeks Afore Reforms

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Mexico’s president, the former mayor of Mexico City, has maintained his promise to ease requirements to enroll in the national pension system. Andrés Manuel López Obrador (AMLO) is not only increasing disbursement rates, he is lowering the retirement age. Obrador shared his plan to “distribute between 300 billion and 500 billion pesos from the Federal Treasury to people directly without going through any administrative office of the government.” Mexicans will now receive 2,550 Mexican pesos, or US$ 133, every other month. This doubles the amount received in 2018. The money will be awarded at age 65 now, not age 68 as had previously been the case.

Mexico’s pension system has been transformed over the last two decades, ever since it received recommendations from the World Bank in 1997. Formerly a pay-as-you-go plan, today it is a private, mandatory defined contribution plan. Obrador’s expansion of the system is comprehensive. He announced, “We started with the cards that we already had, but since we are doing a house-by-house census, we will also include pensioners and retirees who did not receive this support. Now they will receive it.” Obrador estimates that 8.5 million Mexican citizens will be enrolled by late February 2019. Currently, 5,100,000 people receive the pension, which is 62 % of the population at the age of eligibility. The pension had been paying out 35.5 billion MXN, a number which would soar to approximately 116 billion MXN if enrollment targets are met.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

China’s Central Bank Creates Macro-Prudential Management Bureau

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The People’s Bank of China (PBOC) created a new department to oversee and attempt to eliminate financial risks to the system. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Like its U.S. Peers, Legg Mason Seeks to Trim Costs

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Legg Mason Inc., a Baltimore-based asset manager, has announced a reduction in workforce as is prepares to streamline operations and save money. Legg Mason’s leadership commented that assets under management fell 5 % year-on-year. Legg Mason currently manages US$ 727.2 billion (as of December 31, 2018), which is down from the previous US$ 767.2 billion. CEO Joseph A. Sullivan noted that a global operating platform will centralize fund administration, IT, and other departments that work with affiliates. Sullivan did not discuss the number of layoffs expected, or specify which areas would be impacted. Legg Mason disclosed they planned to close a quarter of its exchange-traded funds in March 2019. These three ETFs include a U.S. strategy, emerging markets, and a developed markets strategy outside the U.S. However, these funds run around US$ 28 million in assets under management.

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Monetary Authority of Singapore Establishes Corporate Governance Advisory Committee

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On February 12, 2019, the Monetary Authority of Singapore (MAS) revealed the creation of a Corporate Governance Advisory Committee (CGAC). CGAC was formed to advocate for good corporate governance practices among listed companies in Singapore. Bobby Chin, Director of Singapore Telecommunications Limited, will be the Chair of CGAC. According to a MAS press release, “CGAC will identify current and potential risks to the quality of corporate governance in Singapore.”

MAS formed the Corporate Governance Council (Council) in February 2017. The Council was dissolved after it pushed out a publication of its final recommendations on August 6, 2018.

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