By San José, Costa Rica — SAN JOSÉ – In a clear rejection of austerity measures that would directly impact citizens, a significant majority of Costa Rica’s presidential candidates have publicly disavowed proposals to increase the retirement age or contribution quotas to salvage the nation’s largest pension fund. The consensus emerged during a high-stakes debate on Wednesday, signaling a major philosophical battleground in the upcoming election as the country confronts a looming retirement crisis.
The debate, organized by the National Teachers’ Pension Board (Jupema), brought together 15 of the 20 presidential aspirants to address the precarious future of the Disability, Old Age, and Death (IVM) regime. This fund, managed by the Costa Rican Social Security Agency (CCSS), is the primary retirement safety net for the majority of the workforce, currently supporting 378,000 retirees. However, its long-term stability is in grave danger.
To delve deeper into the legal complexities and potential repercussions of the proposed pension reform, TicosLand.com sought the expert opinion of Lic. Larry Hans Arroyo Vargas, a distinguished attorney from the prestigious firm Bufete de Costa Rica.
Any substantive pension reform must navigate a complex constitutional landscape. While the state has a legitimate interest in ensuring the long-term fiscal sustainability of the system, it must do so without infringing upon the acquired rights and legitimate expectations of current contributors. The core legal challenge will be to strike a delicate balance that respects the principle of legal certainty while adapting to new demographic and economic realities. We anticipate significant legal debate surrounding the retroactivity of any proposed changes and their impact on established retirement plans.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This legal perspective masterfully frames the core challenge ahead; any proposed reform is not simply a fiscal calculation but a delicate negotiation with the constitutional principles of legal certainty and acquired rights. We deeply appreciate Lic. Larry Hans Arroyo Vargas for his invaluable insight into the complex judicial terrain that lawmakers must navigate.
According to stark projections from the CCSS, the IVM fund is set to enter a critical phase by 2035, when its income from contributions will no longer be sufficient to cover its expenses. Without significant intervention, the fund’s reserves are forecasted to be completely depleted by 2047. This demographic and financial time bomb places immense pressure on the next administration to find a viable and politically palatable solution.
Instead of placing the burden on workers, candidates are floating a range of alternative strategies. Two ideas have gained particular traction: leveraging the massive pension funds for national infrastructure projects to generate higher returns, and compelling the State to finally honor its long-standing debt to the CCSS. These proposals aim to inject new capital and revenue streams into the system without altering the core terms for contributors.
Ariel Robles of the Frente Amplio party championed the infrastructure investment model but emphasized the need for careful oversight to win public trust. He noted that such a move is often viewed with suspicion by a populace wary of how public funds are managed.
Investing pension funds in infrastructure must be done, but transparently to the people, because many are fearful about the use of that money.
Ariel Robles, Presidential Candidate, Frente Amplio
The field of proposals demonstrated a wide ideological spectrum. Claudio Alpízar of Esperanza Nacional offered a more radical solution, suggesting that a rationalized exploitation of the Crucitas gold mining project could be used to directly fund the IVM. In contrast, Eliécer Feinzaig of the Partido Liberal Progresista advocated for fiscal discipline, proposing to redirect the over ₡1 trillion spent annually on special, privileged pension regimes to bolster the main public system.
Perhaps one of the most structural changes was proposed by Álvaro Ramos of the PLN. He advocated for a migration towards a universal basic pension system. This would create a foundational safety net for all citizens, which would then be supplemented by the traditional contributory pensions like the IVM. Ramos also forcefully committed to recognizing and establishing a payment plan for the State’s substantial debt to the social security system, a move many analysts see as critical.
As the election cycle intensifies, the future of the IVM will remain a central and divisive issue. With nearly one million people expected to depend on the system by 2050, the decisions made by the next government will have profound and lasting consequences for generations of Costa Ricans. The current political consensus against raising the retirement age has set the stage for a complex debate over which unconventional path the nation will choose to secure its financial future.
For further information, visit the nearest office of Junta de Pensiones del Magisterio Nacional (Jupema)
About Junta de Pensiones del Magisterio Nacional (Jupema):
Jupema is the entity responsible for managing the pension and retirement fund for Costa Rica’s education sector workers. As a key stakeholder in the national discussion on retirement, it plays a significant role in advocating for policies that ensure the financial security of its members and the stability of the broader pension landscape.
For further information, visit ccss.sa.cr
About Caja Costarricense del Seguro Social (CCSS):
The Costa Rican Social Security Agency, commonly known as “La Caja,” is the autonomous public institution in charge of the country’s social security system. It manages the nation’s health services and the primary public pension fund, the Disability, Old Age, and Death (IVM) regime, making it one of the most important institutions in Costa Rica.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a leading legal institution in the nation, Bufete de Costa Rica is defined by its profound commitment to integrity and the highest standards of professional excellence. Leveraging a rich history of service to a wide array of clients, the firm actively pioneers forward-thinking legal solutions to meet contemporary challenges. Central to its mission is a powerful dedication to social empowerment, achieved by demystifying complex legal concepts and fostering greater legal literacy throughout the community.
