The Mexican Pension Annuity Market determine the payoffs for the federal government, the IMSS and the insured individual in all these states. This is done with the aid of the next table.

The simplest case is when the individual elects benefits under LSS-73. This is described in the last column of the next table (Case E). Independently of whether the base pension (PB) calculated with the use of Art 167 of LSS-73 is higher than the minimum pension guarantee (PMG) the individual withdraws the cash balance in the SAR-92 account and the old age cash balance in the RCV subaccount. The rest of the cash balances in the housing and RCV subaccounts are collected by the federal government that will grant the annuity or the minimum pension (if the base pension is lower than the minimum pension guarantee). In both cases, the IMSS is not required to transfer to the federal government the portion of the reserve accumulated by the 2.5 percent contribution of the insured individual declared disabled.

**Table 21: Choice of IV Benefits Under LSS-73 and LSS-97 For The Transitional** **<u>Cohort</u>**

||**LS**|**S-97**|**LSS-73**|
|---|---|---|---|
||**CB**<br>**>MC**|**CB**<br>**<MC**||
||**Case A.**|**Case B.**||
|**PB>PMG**|- IMS buys PB<br>- Insu<br>92.<br>- IMS<br>ousing<br>and R<br>- IMS<br>witht<br>S<br>red collects SAR-<br>S collects CB in h<br>CV subaccounts<br>S retains the difference<br>heMC.|- IMS buys PB<br>- Insu<br>92.<br>- IMS<br>ousing<br>and R<br>- IMS<br>diffe<br>S<br>red collects SAR-<br>S collects CB in h<br>CV sub-accounts.<br>S complements the<br>rence withtheMC.|**Case E.**<br>- Fed<br>s BP or PMG.<br>- IM<br>e is untouched<br>Gov pay<br>SS' reserv|
|**PB<PMG**|**Case**<br>- IMS<br>- Insu<br>- IMS<br>B of housing<br>and R<br>ounts<br>- IMS retains the difference<br>witht<br>**C.**<br>S buys PMG<br>red collects SAR-92.<br>S collects C<br>CV subacc<br>S<br>heMC|**Case**<br>- IMS<br>- Insu<br>- IMS<br>s CB in housing<br>and R<br>- Fed<br>v. complements the<br>diffe<br>**D.**<br>S buys PMG<br>red collects SAR-92.<br>S collect<br>CV subaccounts<br>Go<br>rence withtheMC|<br> <br>- Ins<br>d collects cash balance<br>in SA<br>CV<br>suba<br> <br>ure<br>R-92 and old age in R<br>ccount|

**Notes** : CB = Cash Balance, PB = IV basic pension, PMG = Minimum Pension Guarantee, MC = Immediate annuity premium.

If the insured individual elects benefits under the LSS-97, then things are a little more complicated. Four cases need distinguishing. If the basic pension calculated as 35 percent of the average base salary in the last five years is higher than the minimum pension guarantee the individual withdraws the cash balance in the SAR-92 account, the other cash balances (CB) in the RCV and housing subaccounts are collected by the IMSS that purchases the annuity in the private sector by paying an immediate premium. If the immediate premium is lower than the available cash balance, the IMSS retains the difference in the IV reserve (Case A). If the immediate premium is higher than the available cash balances (Case B) the IMSS complements the cash balances with the IV reserve accumulated through the 2.5 percent IV contributions of the working IMSS membership.

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