Wednesday 8 February 2023

Costa Rica Proposes Raising Retirement Age To 70

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8 February 2023 - At The Banks - BCCR

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Photo Marcelo Bertozzi, La Nacion

Q COSTA RICA NEWS – An actuarial analysis prepared  by the School of Mathematics of the University of Costa Rica (UCR), confirms that the Costa Rica Social Security Fund (Caja Costarricense de Seguro Social – CCSS) – commonly referred to as the “Caja” – fund reserve will be depleted in 2030, 10 years ahead of projections, leading to a proposal to push change the retirement age to 70 from the current 65.

The proposal arises from a study to evaluate the financial health of the Disability, Old Age and Death (Invalidez, Vejez y Muerte – IVM) regime.

Among the other proposals is to raise the labour-management and state contributions from 9.16% to 26.4% of the worker’s salary. The breakdown of the contributions would be 13.99% from the employer, that of the employee 8.72% and the state, 3.69%, starting in 2019.

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The study also proposes that the pension be 40% of the average salary of the worker. At present a retiree get up to 60% of their salary.

The proposed changes would apply only to persons who, as of December 31, 2015, were under the age of 51.

But before these proposals can be applied they must be approved by the Board of Directors of the CCSS.

Maria del Rocio Sáenz, executive president of the Caja, said the Board has received the study and it won’t be until next month (January 2017) before discussions will begin. “They (UCR) made some recommendations and presented several scenarios. We have to analyze them to propose some medium and long-term measures,” said Sáenz.

The IVM has 238,644 beneficiaries and some 1.4 million workers contributing, with a reserve fund of ¢2 billion colones.

The UCR report (available online for download at the CCSS website) stresses that, “If no urgent measures are taken, it is estimated that the inflows of contributions and investments will cease to be sufficient to honour the expenses in 2022-2028, so that the reserve would have to be used, which would be exhausted in 2027-2034”.

Click on image to download the report
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The Superintendency of Pensions (Supen) alerted, a decade ago, the CCSS to make urgent changes to the IVM.

The concern of a number of CCSS board directors is the all economic, social, political and technical elements and the impact on the population.

Source La Nacion

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