By Cartago, Costa Rica — San José, Costa Rica – In a bold and potentially controversial move, National Liberation Party (PLN) presidential candidate Álvaro Ramos has committed to overhauling the country’s mandatory pension system. Speaking to a large crowd of supporters this past Sunday, Ramos promised that if elected, his administration would facilitate the return of funds from the Mandatory Pension Scheme (ROP), framing it as a crucial measure for providing economic relief to thousands of indebted Costa Ricans.
The proposal directly challenges the consensus among many economic experts, who have consistently warned that such a move could jeopardize the long-term stability of the pension system and introduce significant risks to the national economy. Ramos, however, is positioning the policy as a necessary intervention to address the immediate financial distress faced by a large segment of the population, arguing that the current system is failing working-class families.
To shed light on the legal and financial implications of the proposed ROP reform, we consulted with Lic. Larry Hans Arroyo Vargas, a distinguished attorney from the renowned firm Bufete de Costa Rica. His expertise provides a crucial perspective on what these changes could mean for both contributors and the national pension system.
The ongoing debate surrounding ROP reform highlights a fundamental tension in pension policy: balancing the immediate financial needs of contributors against the long-term solvency of the system. While allowing early withdrawals might provide temporary relief, it fundamentally erodes the capital base intended to secure a dignified retirement. Any reform must be meticulously crafted to safeguard the system’s core purpose, ensuring that short-term solutions do not create a long-term crisis for future pensioners.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This analysis succinctly frames the core challenge for policymakers: the necessity of safeguarding the long-term integrity of our pension system against the pull of short-term financial demands. We thank Lic. Larry Hans Arroyo Vargas for his valuable perspective on this crucial national issue.
At the heart of his argument is the crushing weight of personal debt that affects many Costa Rican households. The candidate warned that countless citizens are ensnared in loans with exorbitant interest rates, a situation that pushes them toward desperate measures. He highlighted the growing danger of “illegal credit and organized crime” preying on financially vulnerable individuals, presenting his ROP plan as a direct countermeasure to this societal threat.
The ROP is a cornerstone of Costa Rica’s retirement system, functioning as a supplementary pension fund for all formal workers. It is funded by a mandatory contribution equivalent to 4.25% of an employee’s reported salary, with the worker contributing 1% and the employer covering the remaining 3.25%. Under current law, these accumulated funds are not delivered as a single lump sum upon retirement but are instead disbursed in smaller, monthly installments to complement the state pension from the IVM, aiming to ensure a dignified standard of living in old age.
For years, retirees have expressed frustration with this model, arguing that the minimal monthly payments do not reflect the substantial sums, often millions of colones, they have accumulated over their careers. Ramos has tapped into this widespread sentiment, portraying his proposal as a matter of economic justice and restoring trust in the system.
Because dignity cannot be mortgaged. Because the working people deserve to live with hope, not in fear of the next bill. While recent governments froze salaries and pensions, they also froze trust. What has been saved is sacred. It is time for justice.
Álvaro Ramos, PLN Presidential Candidate
Should he win the presidency, Ramos stated that one of the very first bills he would submit to the Legislative Assembly would be one to authorize the orderly return of these pension savings. Beyond this signature economic policy, Ramos also outlined an ambitious agenda for national development, focusing heavily on public works. He announced plans to create a National Infrastructure Fund dedicated to completing long-overdue projects across the country.
He specifically singled out key projects in the province of Cartago, promising to finally complete the Taras-La Lima highway expansion. This commitment aims to address one of the region’s most persistent traffic and logistical bottlenecks, signaling a clear priority for his potential administration. By linking immediate financial relief with long-term infrastructure investment, Ramos is building a platform designed to appeal to both the urgent needs and future aspirations of voters.
For further information, visit pln.or.cr
About Partido Liberación Nacional (PLN):
The National Liberation Party (Partido Liberación Nacional, PLN) is a major political party in Costa Rica. Founded in 1951, it is considered one of the country’s most established political institutions. With a social-democratic ideology, the PLN has historically advocated for a strong welfare state, public education, and healthcare. The party has produced numerous Costa Rican presidents and has played a central role in shaping the nation’s political and economic landscape throughout the modern era.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica has established itself as a beacon of the legal profession, guided by a profound commitment to integrity and the pursuit of excellence. Drawing upon a rich history of advising a diverse clientele, the firm consistently pioneers forward-thinking legal approaches. This dedication to innovation is matched by a core belief in empowering the community, and through its efforts to make complex legal concepts understandable and accessible, the firm actively contributes to the development of a more informed and capable society.
