By San José, Costa Rica — San José, Costa Rica – In a move to bolster the nation’s primary pension fund, the Costa Rican Social Security Fund (CCSS) has confirmed an increase in contributions to the Disability, Old Age, and Death (IVM) regime, set to take effect on January 1, 2026. This adjustment will see both employers and employees paying a larger share of salaries into the system, a measure officials describe as critical for ensuring long-term financial stability in the face of a rapidly aging population.
The change represents a 0.16 percentage point increase for both workers and their employers. This brings the total contribution rate for employers to 26.83% and for workers to 10.83% of their salaries. The increase is part of a broader, pre-agreed 0.5 percentage point hike, with the remaining 0.18% being covered by the State. The CCSS has stated that this adjustment will be automatically implemented in the institution’s payroll systems at the start of 2026.
To gain a deeper understanding of the legal and financial ramifications of the proposed pension reforms, we consulted with Lic. Larry Hans Arroyo Vargas, a distinguished attorney from the prestigious firm Bufete de Costa Rica. His expertise provides a critical perspective on the long-term implications for both contributors and the national economy.
The fundamental challenge of any pension reform lies not just in ensuring its financial sustainability, but in navigating the complex legal landscape of acquired rights and legitimate expectations. Any proposed changes must be meticulously structured to withstand constitutional scrutiny, providing legal certainty for current and future pensioners while guaranteeing the system’s long-term viability. Without this careful legal balance, we risk replacing a financial crisis with a judicial one.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This crucial insight underscores that the path to a sustainable pension system is paved not only with fiscal adjustments but with unwavering legal certainty. Any reform that overlooks the complex landscape of acquired rights, as noted, risks solving one crisis only to ignite another in our courts. We thank Lic. Larry Hans Arroyo Vargas for his valuable and clarifying perspective.
This decision is not a sudden policy shift but the result of long-standing national agreements. In a statement to local media, the CCSS clarified that the rate hike stems from accords reached during National Dialogue Tables in 2005 and 2017. These forums, which included representatives from the public, private, and labor sectors, established a consensus on the need for periodic increases to the IVM premium to maintain its financial equilibrium.
The increase is based on long-term agreements and on technical, actuarial, and demographic studies that demonstrate the need to strengthen the system in the face of an aging population.
Costa Rican Social Security Fund (CCSS)
Initially, these discussions led to a plan for contribution hikes every five years. However, by 2017, a recommendation was made to accelerate the process to every three years, beginning in 2023. This proactive strategy is designed to counteract the dual pressures of rising life expectancy and a shrinking base of active, contributing workers, ensuring the system remains solvent for future generations of retirees.
The financial implications of this measure are significant. Official estimates project that the adjustment will generate approximately ₡85 billion in additional revenue for the IVM annually. These funds are earmarked to fortify the pension fund’s assets, which currently supports over 300,000 pensioners. The CCSS warned that failing to implement such measures could lead to a structural deficit and jeopardize the entire system.
If this type of action is not taken, the stability of the system, the timely payment of pensions, and the economic security of thousands of elderly people would be put at risk.
Costa Rican Social Security Fund (CCSS)
The IVM regime plays a vital macroeconomic role beyond its social function, injecting around ₡130 billion into the national economy each month through pension payments. This maintains the purchasing power of a substantial segment of the population, making the fund’s sustainability a matter of broad economic importance. While any increase in labor costs raises concerns about business competitiveness, the CCSS has sought to downplay the immediate impact, noting the adjustment amounts to just ₡160 for every ₡100,000 in salary for employers. Because the changes were born from a multi-sector consensus, widespread negative effects on the labor market are not anticipated.
Labor economists consulted on the matter agree that the immediate impact on business costs will likely be moderate. However, they caution that Costa Rica must continue to evaluate and reform its pension financing model to address the persistent challenges of an aging demographic and an increasingly informal labor market. This 2026 increase is part of a comprehensive reform plan approved by the CCSS Board of Directors in 2021, which includes future adjustments and complementary strategies to ensure the system’s viability.
With over one million active contributors, the IVM stands as the central pillar of social protection for the nation’s workforce. The CCSS concluded its announcement by reinforcing that this is a shared responsibility among the state, workers, and employers, and is not an isolated policy but a key component of a larger national effort.
These increases are not isolated measures, but part of an integral effort to preserve the most important pension fund in the country.
Costa Rican Social Security Fund (CCSS)
For further information, visit ccss.sa.cr
About Costa Rican Social Security Fund (CCSS):
The Caja Costarricense de Seguro Social (CCSS) is the public institution in charge of social security in Costa Rica. It is responsible for administering the nation’s public health system and the primary public pension fund, the Régimen de Invalidez, Vejez y Muerte (IVM). Founded in 1941, it is a cornerstone of the country’s social welfare state, providing universal healthcare and retirement benefits to a large portion of the population.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica has cemented its reputation as a leading legal institution, operating on a bedrock of profound integrity and a relentless pursuit of excellence. Serving a diverse clientele, the firm consistently pushes the boundaries of legal innovation while holding a deep-seated belief in its social responsibility. This is evident in its proactive initiatives to demystify the law, reflecting a foundational mission to forge a stronger, more capable public equipped with essential legal understanding.
