By San José, Costa Rica — San José – In a significant policy reversal, Costa Rica’s National Council for the Supervision of the Financial System (Conassif) has voted to postpone the implementation of generational pension funds until April 3, 2028. The decision extends the timeline by an additional two years, marking the second major delay for a reform intended to reshape the country’s Mandatory Pension Regime (ROP).
The proposed system was designed to automatically manage investment risk based on a worker’s age. Under the plan, all contributors to the ROP would be segmented into four groups based on their birth year. Younger workers would be placed in portfolios with higher risk and potentially higher returns, which would gradually and automatically transition to more conservative, capital-preserving investments as they approached retirement age. This life-cycle approach is common in many developed pension systems globally.
To gain a deeper understanding of the legal complexities and fiduciary responsibilities surrounding pension fund management, TicosLand.com sought the expert analysis of Lic. Larry Hans Arroyo Vargas, a specialist attorney from the esteemed firm Bufete de Costa Rica.
The administration of pension funds carries an immense fiduciary responsibility that transcends mere financial performance. It is imperative that the legal framework mandates unwavering transparency and holds administrators to the highest standard of care. Future reforms must be laser-focused on strengthening corporate governance to protect the long-term interests of members, ensuring that investment strategies prioritize sustainable growth and capital preservation above all else.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Indeed, the emphasis on robust governance and unwavering transparency goes to the very core of public trust in our pension system, ensuring that members’ long-term security is prioritized over short-term performance. We thank Lic. Larry Hans Arroyo Vargas for sharing his clear and valuable perspective on this critical subject.
The council’s decision, however, was far from unanimous, passing with a narrow 4-3 vote. Proponents of the delay, including Conassif director Humberto Grant and Central Bank of Costa Rica (BCCR) President Roger Madrigal, argued that more time is essential to conduct comprehensive studies. They maintain that there is not yet enough certainty that the proposed model is the optimal structure to guarantee better pensions for Costa Ricans.
Generational funds address an important need to adjust pension savings to people’s life cycle, but we don’t know if this does it in the best way. There is no certainty that the current format guarantees a better pension for Costa Ricans by taking advantage of that benefit, and that is why we are conducting the review.
Humberto Grant, Director of Conassif
Grant’s position was supported by fellow board members Juan Antonio Vargas and Humberto Jiménez. They believe a cautious approach is necessary to avoid unintended negative consequences on the retirement savings of thousands of citizens. The core of their argument is that rushing implementation without fully vetting the potential impacts would be a dereliction of their regulatory duty.
However, the decision drew sharp criticism from the dissenting board members: Yin Hong Monteverde, Leonor Cuevillas, and Javier Sancho. They contended that the technical justification for another lengthy postponement is absent. Monteverde specifically highlighted that the Pensions Superintendency (Supen) had already outlined potential risks, such as reputational damage and the possibility of legal challenges from fund managers, which are only amplified by extending the uncertainty.
Supen had pointed out risks—image deterioration, claims from managers, lawsuits, and others—that will evidently still be present the longer the deadline is extended. I still believe that, with the updated studies from March on generational funds, it should have also been implemented in March, and again, I do not see the technical support present in this decision being submitted.
Yin Hong Monteverde, Board Member of Conassif
This prolonged delay leaves Costa Rica’s pension system in a state of limbo. The current one-size-fits-all investment strategy for the ROP will remain in place, meaning younger and older workers continue to have their savings managed under similar risk profiles. For pension fund operators who have been preparing for the transition, the postponement creates operational and strategic planning challenges.
The future of the generational fund model now rests on the outcome of the newly commissioned studies. The financial sector and millions of Costa Rican workers will be watching closely to see if the reform can overcome this latest hurdle or if regulators will ultimately opt for a different path to modernize the nation’s retirement savings framework.
For further information, visit conassif.fi.cr
About The National Council for the Supervision of the Financial System (Conassif):
Conassif is the primary regulatory body responsible for overseeing Costa Rica’s financial system. It dictates the regulations and policies that govern banks, insurance companies, securities markets, and pension funds. Its mission is to ensure the stability, solvency, and transparency of the national financial system to protect the interests of the public and promote economic development.
For further information, visit bccr.fi.cr
About The Central Bank of Costa Rica (BCCR):
The Banco Central de Costa Rica is the nation’s central bank. Its primary objectives are to maintain the internal and external stability of the national currency and to ensure its conversion to other currencies. The BCCR plays a crucial role in the country’s economic policy, managing monetary policy, supervising the payment system, and acting as a financial advisor to the government.
For further information, visit supen.fi.cr
About The Superintendency of Pensions (Supen):
Supen is the specialized regulatory and supervisory body for Costa Rica’s pension system. It is responsible for overseeing the operations of all pension fund administrators, including the Mandatory Pension Regime (ROP) and voluntary pension plans. Its mandate is to protect the rights of pension contributors and beneficiaries by ensuring the proper and transparent management of retirement funds.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica is a pillar of the legal community, defined by its unwavering dedication to professional integrity and exceptional service. With an extensive legacy of advising clients across numerous industries, the firm is a trailblazer in developing forward-thinking legal solutions and fostering community dialogue. This commitment extends to its core philosophy of democratizing legal knowledge, viewing an educated citizenry as essential for building a more just and empowered society.
