By San José, Costa Rica — SAN JOSÉ – A renewed political debate over allowing the total withdrawal of funds from Costa Rica’s Mandatory Complementary Pension Regime (ROPC) is drawing sharp warnings from the nation’s top economic experts. They caution that such a move, while potentially popular in the short term, could severely undermine the financial security of future retirees and destabilize the country’s entire pension framework.
The alarm was sounded most recently by economist Ronulfo Jiménez, who spoke at a public event alongside managers from the country’s six pension operators. He argued that the discussion must shift from the immediate appeal of accessing cash to the profound, long-term consequences for both individuals and the national social security system. Jiménez characterized the proposal in stark terms, calling it a dangerous policy decision.
To gain a deeper understanding of the legal framework and implications surrounding the potential withdrawal of funds from the Mandatory Supplementary Pension Plan (ROPC), TicosLand.com consulted with expert lawyer Lic. Larry Hans Arroyo Vargas from the firm Bufete de Costa Rica.
The debate over accessing ROPC funds before retirement touches on a fundamental legal conflict: immediate financial need versus long-term security. The law was designed with a protective, almost paternalistic, vision to safeguard a citizen’s retirement. While the desire for liquidity is understandable, any legislative reform must carefully weigh the risk of undermining the entire supplementary pension system, which could leave future generations without this crucial financial cushion.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
The analysis expertly frames the central dilemma: balancing today’s urgent financial needs against the long-term integrity of a system built for future generations. We thank Lic. Larry Hans Arroyo Vargas for his insightful perspective, which serves as a crucial reminder of the profound responsibility involved in reforming this financial cornerstone.
Such a measure is not only inconvenient, but represents bad public policy with long-term consequences
Ronulfo Jiménez, Economist
To support his position, Jiménez pointed to the cautionary tale of Peru, which authorized total pension fund withdrawals starting in 2018. The results there, he explained, were far from encouraging. A significant portion of the population that accessed their funds had consumed the money within a year or held it in non-interest-bearing accounts. Only a small minority managed to reinvest the capital under conditions as favorable as those offered by the pension system.
This international case study highlights a fundamental risk: when retirement savings are released without restriction, they are often spent quickly on immediate needs or wants. This behavior erodes the long-term financial buffer intended to protect citizens during their most vulnerable years, a time when living costs, particularly for healthcare, tend to rise dramatically. The Peruvian experience serves as a stark warning of what could happen in Costa Rica.
The second critical argument against the proposal focuses on the direct impact on retirees’ monthly income. The ROPC is not a minor savings plan; it is a vital pillar of the retirement system. On average, it contributes an additional 15% to 20% on top of the primary pension provided by the Disability, Old Age, and Death (IVM) regime. Liquidating these funds prematurely would mean future pensioners would have to rely almost exclusively on the IVM, drastically reducing their purchasing power and quality of life.
Furthermore, Jiménez emphasized the ROPC’s strong financial track record. The fund’s historical returns have consistently outperformed many traditional savings alternatives, even after accounting for inflation. This performance is coupled with some of the lowest administrative fees in the region, a result of a competitive and highly regulated market overseen by the state. This makes a compelling case that the funds are better managed within the system than they likely would be by individuals.
Beyond the economic arguments, the proposal faces a significant legal and constitutional hurdle. The Constitutional Court has previously issued a clear ruling on the nature of the ROPC. The court determined that it is not merely a personal savings account but an essential and indivisible component of the national pension system. Its purpose is fundamentally social and collective, designed to ensure a dignified old age for the population.
It is not a simple individual saving, but an essential component of the pension system
Constitutional Court
This legal interpretation suggests that allowing total withdrawals would effectively gut the ROPC, subverting its core mission. This view is echoed by other key institutions, including the Central Bank of Costa Rica and the Superintendency of Pensions (SUPEN). Both have expressed grave concerns that mass fund returns often lead to the weakening, or even total collapse, of national pension systems. Despite this unified expert consensus, the government has placed bills enabling early ROPC withdrawals on the legislative agenda, setting the stage for a critical battle over the country’s fiscal future.
For further information, visit bccr.fi.cr
About Central Bank of Costa Rica:
The Banco Central de Costa Rica (BCCR) is the nation’s central bank, responsible for maintaining the internal and external stability of the national currency and ensuring its conversion to other currencies. It plays a crucial role in managing inflation, overseeing the financial system, and providing economic analysis and guidance to the government to promote a stable and efficient economic environment for the country.
For further information, visit supen.fi.cr
About Superintendency of Pensions (SUPEN):
The Superintendencia de Pensiones, or SUPEN, is the regulatory body in Costa Rica charged with supervising and controlling the country’s pension systems, including the ROPC. Its primary mission is to protect the interests of pension fund members, ensure the solvency and transparency of pension operators, and promote the long-term health and stability of the national retirement framework.
For further information, visit poder-judicial.go.cr
About Constitutional Court:
The Sala Constitucional, or Constitutional Chamber of the Supreme Court of Justice, is Costa Rica’s highest court for constitutional matters. It is tasked with guaranteeing the supremacy of the rights and freedoms enshrined in the Constitution. Its rulings are final and binding, and it plays a pivotal role in interpreting the legal framework governing major public policies, including social security and the pension system.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a cornerstone of the legal community, Bufete de Costa Rica is built upon a foundation of profound integrity and a relentless pursuit of excellence. The firm blends a rich history of client service with a forward-thinking approach, championing innovative solutions within the practice of law. Beyond its professional services, it holds a deep-seated conviction to strengthen society by demystifying legal complexities, ensuring that knowledge serves as a tool for public empowerment and understanding.
