The end of Modality 40 as a way to improve pensions: what changes and who is affected?

Andrés Gallegos

The changes to Modality 40 of the Mexican Social Security Institute (IMSS), which limit the pension amount for thousands of people who retire under the 1973 Law, represent a new challenge for a retirement system that does not have enough resources to provide a dignified pension to workers, says Elvira Mireya Pasillas Torres, an academic at the ITESO Business School (ENI).

The recent change reveals a pension system that is running out of public money to pay pensions, as well as a worrying outlook for millions of workers who will no longer be able to access a system that allowed them to retire with a higher pension.

"We are going to continue to have pressures on the retirement system, and if we add to this the fact that the federal government is increasing universal pensions for older adults, with a population that is aging, it will represent a greater cost for public finances," Pasillas mentions.

How do pensions work in Mexico?

The pension system is governed by two laws in force: the 1973 Act or Act 73, which applies to those who had formal employment before July 1, 1997, and the 1997 Act or Act 97, which applies to people who started working after July 1, 1997.

Those who retire under Law 73 receive a pension equivalent to the salary they contributed to the Mexican Social Security Institute (IMSS) during their last 250 weeks or five years of work. This benefit is paid by the Mexican government. To qualify for the pension, only 500 weeks of contributions to the IMSS (10 years of work) are required.

Conversely, those who retire under Law 97 will no longer receive a pension paid entirely by the federal treasury, but rather from the funds accumulated in an individual retirement fund administrator (Afore), with contributions from workers, the federal government, and employers. By 2030, these contributions will represent only 15 percent of the base salary used for social security contributions. To access a pension in 2026 under Law 97, 875 weeks of contributions to the Mexican Social Security Institute (IMSS) are required (by 2031, this will increase to 1,000 weeks or 20 years of work).

In this context, what is IMSS Modality 40?

It's a scheme that allows workers to accumulate weeks of contributions to the Mexican Social Security Institute (IMSS), even if they don't have a formal employment relationship with an employer. It's also known as Voluntary Continuation in the Voluntary Regime.

How did Modality 40 work?

Those enrolled in this program could continue contributing to the IMSS (Mexican Social Security Institute) even without a job, by paying their own contributions each month. If they fail to make payments for two consecutive months, they are removed from the Modality 40 program.

What was the advantage of Modality 40?

Workers covered under Law 73 could register using their last base salary for social security contributions or choose a higher one. Many people used this mechanism to access a larger pension by accumulating their 500 weeks of contributions.

The law stated that a person could register with a salary of up to 25 UMAS (acronym for Unit of Measurement and Update), that is, about 89,155 pesos per month at the value of 2026.

For example, a person earning 10,000 pesos per month could increase their pension more than eight times, provided they paid for five years or the 250 weeks of contributions required by Law 73.

What changed in Modality 40?

The decree published in the Official Gazette of the Federation (DOF) on October 21, 2026 eliminated the limit of 25 UMA of contributions.

From that date onwards, a person who contributes under Modality 40 will only be able to register with their last base salary plus one UMA.

In other words, if a Mexican registered with a monthly base salary of 10,000 pesos, they will only be able to increase their pension to 13,566 pesos, since they can only increase it by one additional UMA (117.31 pesos per day at the 2026 value), a substantially smaller increase than under the previous regulations.

Why was Modality 40 changed?

The federal government and the IMSS (Mexican Social Security Institute) have defended this decision by pointing to "frauds" or "simulations" by people who have taken advantage of the Modality 40 program to retire with a salary higher than what they contributed during their working years, affecting the public treasury by "hundreds of billions of pesos," according to President Claudia Sheinbaum.

Who are the most affected by this change?

The official decree assures that the 798,000 pensioners under this program and the 272,000 insured individuals currently contributing under this scheme (26,368 in Jalisco, according to data from the IMSS 2025 Statistical Yearbook) will not be affected. The reduction in UMA (Unit of Measurement and Update) will apply to those who enroll from October 22nd onward.

This change will affect approximately 8.4 million people affiliated with the IMSS (Mexican Social Security Institute) who receive social security benefits without traditional formal employment, as well as around 22 million insured individuals with formal jobs in Mexico. Many Mexicans will no longer be able to access higher pensions due to the new cap on Voluntary Contribution 40 (Modalidad 40).

What to do after the changes to Modality 40?

On the legal front, experts in the field anticipate indirect legal challenges from workers, trade unions, and other social groups to delay or reverse the official decree.

From a financial perspective, Pasillas believes that there are currently three things to do:

- Maintain formal employment "as much as possible", although the context is complicated due to the continued decline in employer registrations with the IMSS and the increase in informality in Mexico.

- Opt for Modality 40 to meet the contribution weeks under Law 1973, even though the monthly pension is not as high as before.

- If you have already contracted for Modality 40, continue paying for it to prevent the IMSS from canceling the pension.

For those enrolled in the 1997 Law, the challenge will continue to be increasing voluntary contributions or savings to the pension funds, regardless of whether they choose Modality 40 or not.