From the Wall Street Journal:

Ever since Mexican President Felipe Calderon won election in July with just under 34% of the vote, critics and supporters alike have cast doubt on his ability to govern.

But now it looks like Mr. Calderon, who is less than four months into his six-year term and lacks a majority in Congress, may be about to pocket a major legislative victory. And on no less an issue than the transformation of the pension system covering federal workers from pay-as-you-go to a fully funded system of individual accounts (emphasis ours).

Why the switch to personal accounts?  For one thing, Mexico predicts its pension shortfall under the current system to be about $7 billion in 2012.  That's a lot of money.  The system's actuarial deficit is so large, in fact, that the "transition costs" (about $1 billion plus increased government contributions into worker accounts) seem tiny.  Sound familiar? 

A better explanation for the specific reform of personal accounts is simple: investment works.  Chile's system in particular has provided a model for Mexico, but other countries such as Sweden have also successfully embraced personal ownership.  It seems that when government pension programs run into trouble, individual accounts are increasingly the way to go.  Slowly but surely, the tide is turning.

As for Mexico, its congress passed the reform last week and the senate is expected to do the same within the next few days.