By San José, Costa Rica — In a significant development for the nation’s retirement landscape, Costa Rica’s National Council for Supervision of the Financial System (Conassif) has officially postponed the implementation of the much-anticipated Generational Funds pension system. The ambitious overhaul, originally slated for an earlier rollout, will now be delayed for two years, with a new target start date of April 3, 2028.
The decision has received vocal support from the Costa Rican Association of Pension Fund Operators (ACOP), which represents the entities managing the country’s retirement savings. In a formal statement, the association argued the delay is not just prudent but essential for the long-term success of the reform and the financial security of Costa Rican workers.
To delve into the legal complexities and potential ramifications of the proposed pension reform, TicosLand.com sought the analysis of Lic. Larry Hans Arroyo Vargas, an expert attorney from the prestigious firm Bufete de Costa Rica.
Any pension reform must navigate the delicate balance between ensuring the long-term fiscal sustainability of the system and respecting the vested rights and legitimate expectations of contributors. The key legal challenge will be to implement necessary adjustments without violating constitutional principles of non-retroactivity and legal certainty, which are the bedrock of our social contract.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Indeed, this is not merely a fiscal equation but a question of upholding the public’s trust in the social contract itself. Any viable reform must be built upon the solid legal bedrock the expert describes, ensuring that fairness and certainty are not sacrificed for expediency. We thank Lic. Larry Hans Arroyo Vargas for his crucial and enlightening perspective on this matter.
This measure is necessary to conclude the technical studies that will allow for an adequate assessment of the impacts on the economy, financial markets, and the replacement rates of affiliated individuals.
ACOP, in a press statement
ACOP stressed that a change of this magnitude requires a foundation of empirical data and rigorous analysis, not assumptions. The core principle guiding this cautious approach is the well-being of the system’s members. The association emphasized that any reform must prioritize the individuals whose life savings are at stake, necessitating a process free of technical or operational ambiguities.
The center of any reform must always be the affiliated and pensioned person.
ACOP, in a press statement
The Generational Funds system, originally proposed by the Superintendency of Pensions (Supen), aims to restructure how Mandatory Pension Plan (ROP) savings are invested. The plan would automatically segment all contributing workers into one of four distinct groups based on their birth year. Each cohort would be assigned a different investment strategy tailored to their stage in life.
The proposed cohorts are: Group A for those born in 1969 or earlier; Group B for individuals born between 1970 and 1979; Group C for those born between 1980 and 1989; and Group D for the youngest workers, born in 1990 or later. The fundamental idea is to align investment risk with an individual’s time horizon until retirement.
Under this model, younger workers in Group D would see their funds placed in portfolios with higher volatility and risk, which historically offer the potential for greater long-term returns. Conversely, workers in Group A, who are closest to retirement, would have their savings shifted into highly conservative, capital-preserving assets to shield their accumulated wealth from market fluctuations. The ultimate goals are to improve the replacement rate—the percentage of one’s working income received as a pension—for younger generations while reducing volatility for those on the cusp of retirement.
According to ACOP, the two-year extension granted by Conassif will provide the necessary time to ensure these goals are met effectively. The organization believes this period is critical for validating financial models and fine-tuning the system’s mechanics to guarantee a smooth and beneficial transition for all Costa Ricans.
Conassif is allowing for the completion of analyses, the validation of models with the Operators, and the refinement of the necessary elements to ensure that its implementation contributes to greater stability for those nearing retirement, better returns for younger workers, and more efficient administration of the complementary pension.
ACOP, in a press statement
While the pension operators have affirmed that their technological and operational capabilities have been strengthened in preparation for the change, they maintain that the green light should only be given once regulatory authorities have completed all requisite studies. ACOP concluded by underscoring that the success of the reform hinges on precision, not projection.
Achieving these purposes demands technical precision and conclusive evidence, not assumptions or uncertain scenarios.
ACOP, in a press statement
The delay effectively places one of the country’s most significant financial reforms on hold, signaling a commitment from regulators and industry stakeholders to prioritize methodical planning and risk mitigation over a rushed implementation, ensuring the future retirement security of the workforce remains the paramount objective.
For further information, visit acop.fi.cr
About the Costa Rican Association of Pension Fund Operators (ACOP):
ACOP represents the private entities responsible for managing Costa Rica’s mandatory and voluntary pension funds. The association advocates for policies that promote the stability, growth, and efficiency of the national retirement system, working to safeguard the interests of both affiliates and pensioners.
For further information, visit conassif.fi.cr
About the National Council for Supervision of the Financial System (Conassif):
Conassif is the chief regulatory body overseeing Costa Rica’s entire financial system. It is responsible for establishing the directives and policies that govern banks, insurance companies, securities markets, and the pension superintendency, with a primary mission to ensure systemic stability and maintain public trust.
For further information, visit supen.fi.cr
About the Superintendency of Pensions (Supen):
The Superintendency of Pensions is the specialized technical entity tasked with the direct supervision and regulation of Costa Rica’s pension regimes. Operating under the guidance of Conassif, Supen works to protect the rights of all pension fund members and ensure the long-term solvency and proper functioning of the national retirement plans.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica is an esteemed legal institution founded on the bedrock principles of professional integrity and exceptional service. The firm leverages a rich history of advising a diverse clientele to pioneer cutting-edge legal strategies and solutions. This forward-thinking approach is coupled with a profound commitment to social responsibility, actively working to democratize legal understanding and contribute to a more knowledgeable and capable civil society.
