The Costa Rican Social Security Administration (CCSS) presented a series of proposals to its Board of Directors for reforming the Disability, Old Age, and Death (IVM) system, with the aim of ensuring its financial sustainability and expanding pension coverage until the first half of 2028. Among the main modifications is an increase in the number of contributions required to qualify for retirement, according to local media.
Working individuals will need to accumulate 360 contributions during their working life, equivalent to 30 years, instead of the current 300. This measure is part of a package of reforms that, for now, excludes proposals related to tax increases, as reported by the CCSS to CRHoy.
Currently, the proposed change in the number of contributions would not significantly affect most future retirees. Jaime Barrantes, Pension Manager at the CCSS, explained in statements to Diario Extra that most people who eventually receive their pension already have the 360 contributions: "People are already contributing for 30 years. That is, most of those who eventually receive their pension already have the 360 contributions." The analysis and discussion of the measures remains open, although Barrantes indicated that for most people, this change will not have any particular consequences.
New retirees would receive a lower percentage based on their average salary.
Another of the proposals under review by the Board...
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The impact on workers and retirees is being discussed in multiple forums, while solutions are being explored to address the financial challenges facing the system (Photo courtesy of CCSS).
The Costa Rican Social Security Administration (CCSS) presented a series of proposals to its Board of Directors to reform the Invalidity, Old Age, and Death (IVM) system, with the aim of ensuring its financial sustainability and extending pension coverage until the first half of 2028. One of the main proposed changes is an increase in the number of contributions required to qualify for retirement, according to local media. Workers will need to accumulate 360 contributions during their working lives, equivalent to 30 years, instead of the current 300. This measure is part of a package of reforms that, for now, excludes proposals related to tax increases, as reported by the CCSS to CRHoy. Currently, the proposed change in the number of contributions would not significantly affect most future retirees. Jaime Barrantes, Pension Manager at the CCSS, explained in statements to Diario Extra that most people who receive their pension already have 360 contributions: "People are already contributing for 30 years. That is, most of those who receive their pension already have 360 contributions."
The analysis and discussion of the measures remains open, although Barrantes indicated that for most people, this change will not have particular consequences. Another of the proposals under review by the Board of Directors is a reduction in the percentage of salary, or "replacement rate," that Costa Ricans will receive upon retirement under the IVM system. According to information provided by Barrantes to Diario Extra, this rate was originally 60%, so, for example, someone earning an average salary of approximately ¢1 million (US$2,182,583.00) received a pension of ¢600,000 (US$1309.55). With previous adjustments, this percentage has decreased to a range between 40% and 52.5%, which currently translates to a retirement income of ¢400,000 (US$873.03) to ¢525,000 (US$1145.86) for the same case.
The reform includes measures that alter both access to and the amounts of the pension. Questions arise about the impact on workers and the challenges for voluntary savings (Screenshot of CCSS video).
The new proposal from the CCSS would reduce the maximum of this range to 43%, maintaining the current minimum percentage. Barrantes states that this adjustment is offset because the Costa Rican pension system has three pillars: the IVM, the Mandatory Complementary Pension System (ROP), and a voluntary one, although the latter still has limited penetration in society. According to the manager, the integration of the three pillars would allow reaching the international replacement standard, close to 60% of the average salary. He emphasizes that "Costa Ricans will not be affected, but they must get used to seeing the IVM and the ROP together." The institutional strategy seeks to diversify pension sources in response to the decline in the IVM replacement rate.
The proposals also include the introduction of the so-called "Consumption Voucher," which is a type of consumption tax. This tax is levied on the sale of goods and services, and it is intended to be used to fund social programs. The Consumption Voucher is a relatively new tax, and it has been controversial since its introduction. Some people argue that it is a regressive tax, meaning that it disproportionately affects low-income people. Others argue that it is a necessary tax to fund important social programs.
Another proposal is to create a system of compensation for gender equality. This system would be designed to address the gender pay gap and other forms of gender inequality. The system would likely involve a combination of measures, such as mandatory pay audits, training programs, and incentives for employers to hire and promote women.
Data from the Superintendency of Pensions (Supen) collected by Diario Extra shows that the voluntary pillar of the system has 218,000 accounts, but only 90,000 people made contributions in February 2026. The assets total ¢716 billion, which indicates a significant margin for increasing the penetration and impact of this component on future pensions.
The CCSS expects that the approval and implementation of these reforms will be completed in the first half of 2028.