Legislators from different political parties are proposing different ways to face the probable, irreversible crisis related to the Disability, Old Age and Death Regime (IVM), managed by the Costa Rican Social Security Fund (CCSS): this crisis will start in 2022 if no actions are taken.
Legislators from Acción Ciudadana (PAC), Movimiento Libertario, Frente Amplio, Alianza Democrática Cristiana (PUSC) and Partido Unión Social Cristiana are presenting their proposals at a time when they summoned executive president of the CCSS Maria del Rocío Sáenz to and the authors of the actuarial study of the University of Costa Rica (UCR), who warned about the deterioration of the IVM, to appear.
According to the report, if no decisions are made in the short term, the regime will collapse and by 2027 the reserve to pay pensions would be exhausted.
This means that within 5 to 10 years, the funds for income will not be enough to pay the pensions and in that scenario, the Fund would have to use the reserve, which would only cover 10 or 15 more years.
Different scenarios are discussed, such as increasing the percentage of contribution to 15% and increasing the retirement age to 70 years.
Legislators’ proposals to prevent the IVM from falling into a catastrophic crisis are the following:
Ottón Solís, an economist by profession, says that the institution should Increase contributions, reduce profits or increase the pension age
Edgardo Araya, head of Frente Amplio, declared that the issue is complex, but he suggests raising the contribution of the sectors with higher incomes. He doesn’t support any attempt to increase the age of retirement.
From the perspective of Partido Libertario, the best thing to do would be to redesign the pension system, but as for the existing one, he proposes a system of individual capitalization accounts.
Legislator Mario Redondo, from Alianza Democrática Cristiana, thinks that selling a public bank to capitalize the IVM is the best option.
He does not support the idea of changing the retirement age to 70 years or increasing the contributions.
Luis Vásquez, from the PUSC, points out that there is still time to solve the crisis, as long as actions are taken.