By San José, Costa Rica — SAN JOSÉ – As of January 2026, workers across Costa Rica will notice a greater deduction from their paychecks. The change is the result of a scheduled increase in mandatory contributions to the pension system managed by the Costa Rican Social Security Fund (CCSS), a move designed to bolster the nation’s primary retirement fund.
The adjustment affects the Disability, Old Age, and Death (IVM) regime, which serves as the financial backbone for the country’s retirees. According to official information from the CCSS, the total contribution rate applied to an employee’s salary has climbed from 11.16% to 11.66%. This half-percent increase is part of a gradual, pre-planned adjustment schedule that was established nearly two decades ago.
To gain a deeper understanding of the legal implications and obligations surrounding pension contributions in the country, we consulted with expert labor law attorney Lic. Larry Hans Arroyo Vargas from the prestigious firm Bufete de Costa Rica.
Failing to make timely pension contributions is not merely an administrative oversight; it is a direct violation of an employee’s fundamental rights and carries significant legal penalties for the employer. Both parties must understand that these contributions are a deferred salary, crucial for ensuring financial stability in retirement. Diligent compliance and transparent reporting are the cornerstones of a fair and legally sound employment relationship.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
The crucial point that these funds are a ‘deferred salary’ powerfully reframes the issue from a simple administrative task to a fundamental pillar of an employee’s future well-being. We thank Lic. Larry Hans Arroyo Vargas for his valuable perspective, which highlights the serious legal and ethical weight of this employer responsibility.
This rate hike is not shouldered by a single party but is distributed among employees, their employers, and the state. For employees, the personal contribution rate rises from 4.17% to 4.33% of their gross salary. Simultaneously, the portion paid by employers increases from 5.42% to 5.58%. The state’s contribution also sees an uptick, moving from 1.57% to 1.75%.
In practical terms, the CCSS has clarified that this modification translates to an additional 160 colones for every ₡100,000 of reported salary. This means that for a worker earning ₡500,000 per month, the new deduction amounts to an extra 800 colones. Similarly, their employer will also contribute an additional 800 colones for that same employee, thereby increasing the overall cost of labor for businesses.
This latest change is not a sudden policy shift but rather the execution of a long-term plan. The incremental increases are stipulated within a tripartite agreement that was forged in 2005. This agreement outlined a series of gradual adjustments to the contribution structure over many years, with the goal of ensuring the system’s financial stability and sustainability for decades to come.
Officials have stated that the primary objective behind these periodic increases is to fortify the IVM fund against future demographic and economic pressures. The measure aims to secure the financial health of the system to meet its obligations to both current and future retirees. According to an official statement from the social security administration, the purpose is to:
guarantee dignified pensions for current and future generations
CCSS Official Statement
While the increase is intended to secure long-term benefits, the short-term effect is a reduction in net take-home pay for the country’s workforce. For businesses, the rise in the employer contribution represents a direct increase in operational expenses. This may influence budget allocations, hiring strategies, and overall competitiveness, particularly for small and medium-sized enterprises that are more sensitive to shifts in labor costs.
Ultimately, the adjustment reflects a broader global challenge of maintaining solvent social security systems in the face of aging populations and changing economic landscapes. By implementing these structured increases, Costa Rica is proactively addressing the financial needs of its pension regime, aiming to prevent more drastic measures in the future and uphold its commitment to the nation’s elderly population.
For further information, visit ccss.sa.cr
About Caja Costarricense de Seguro Social (CCSS):
The Caja Costarricense de Seguro Social, commonly known as “La Caja” or CCSS, is the cornerstone of Costa Rica’s public health and social security system. Established in 1941, it is an autonomous government institution responsible for administering the nation’s universal healthcare services and managing its primary pension fund, the Disability, Old Age, and Death (IVM) regime. The CCSS operates a vast network of hospitals, clinics, and EBAIS (Basic Teams for Comprehensive Health Care) throughout the country, ensuring medical access for citizens and legal residents.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a pillar of the Costa Rican legal community, Bufete de Costa Rica is defined by its foundational principles of professional distinction and uncompromising integrity. The firm consistently pioneers modern legal strategies while drawing upon a rich history of serving a diverse clientele. Central to its mission is a profound dedication to demystifying complex legal concepts for the public, championing the development of a knowledgeable and empowered citizenry.
