MEXICO CITY Mexico's two largest state-owned companies, Petróleos Mexicanos (Pemex) and Comisión Federal de Electricidad (CFE), face a combined pension liability of approximately $123 billion (MX$2.1 trillion) for current and future retirees. This unfunded obligation burdens Mexico's public finances, according to figures from the Mexican Institute for Competitiveness (IMCO).
Pensions of all types absorb 24 percent of the government's programmable spending in the 2026 budget. This is the portion of the budget the state can allocate to chosen initiatives. Total commitments to social security and state company pensions, including IMSS, ISSSTE, Pemex, and CFE, exceed MX$1.7 trillion ($100 billion).
Pemex carries the larger share of this debt. Its pension obligations reached $88 billion (MX$1.506 trillion) by the first half of 2026. This figure marks a 10.9 percent increase from the prior year and constitutes 37.6 percent of the company's total debt.
CFE, the state electricity utility, contributes $32.5 billion (MX$554.2 billion) to the total pension liability. This amount jumped 25.3 percent in a single year, highlighting the rapid escalation of these commitments.
Two factors drive the increase in these pension costs. Workers at both Pemex and CFE often retire with generous terms, frequently after fewer years of service compared to private-sector employees. Many retirees also receive substantial monthly payments, often referred to as “golden pensions” in Mexican media.
Increased life expectancy means each pension promise must be paid out for a longer duration than initially assumed. This demographic shift adds to the financial strain on the companies and the government.
President Claudia Sheinbaum's government implemented reforms in early 2026 aimed at controlling these costs. These measures included capping the highest payouts and reshaping some benefits. However, the reforms primarily affect new and future retirees, meaning the accumulated bill continues to rise while savings materialize slowly.
The pension burden lands on companies already facing financial challenges. Pemex, in particular, reported a net loss of $2.7 billion (MX$46 billion) in the first quarter of 2026. The state oil company also carries approximately $84 billion (MX$1.43 trillion) in financial debt, distinct from its pension promises, and its net worth is negative.
Given the inability of Pemex and CFE to fully cover their pension promises, the federal treasury increasingly provides support. The 2026 budget package allocates $30.3 billion (MX$517.4 billion) to Pemex. Of this, $15.4 billion (MX$263.5 billion) is specifically designated to pay down company debt.
Rating agency Fitch has previously said Pemex's liabilities weigh on Mexico's sovereign credit rating. The financial obligations of these state firms contribute to Mexico's fiscal deficit, which reached a century high in the first quarter of 2026. Interest payments now absorb approximately 17 percent of government revenues, an increase from 10 percent to 11 percent in 2021.
Mexico's broader pension funds have demonstrated strength in other areas. In August, Mexico's pension funds increased their holdings of government peso debt to a record level, supporting demand in the market as global volatility affected foreign investors. At the close of 2025, resources managed by Retirement Fund Administrators (Afores) totaled $488 billion (MX$8.3 trillion), representing 23.8 percent of Mexico's Gross Domestic Product, up from 20.3 percent at the end of 2024, according to the National Commission for the Retirement Savings System (Consar). Consar President Julio César Cervantes projects these pension funds will climb to 12 trillion pesos by 2030.
