{
  "title": "Costa Rica: Technical Assistance Report-Universal Basic Pension: Objectives and Constraints",
  "publication": "Technical Assistance Reports, May 17, 2024",
  "sourceUrl": "https://www.imf.org/en/publications/technical-assistance-reports/issues/2024/05/24/costa-rica-technical-assistance-report-universal-basic-pension-objectives-and-constraints-549458",
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  "summary": "At the request of the Ministry of Finance, a mission from the International Monetary Fund visited San Jose. The purpose of the mission was to assess the proposal to a universal basic pension and to estimate its fiscal and welfare impact on the budget, on pension schemes, and on old age income povert",
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    {
      "heading": "Mission purpose and context",
      "content": "- At the request of the Ministry of Finance, a mission from the International Monetary Fund visited San Jose to assess the proposal to a universal basic pension and to estimate its fiscal and welfare impact on the budget, on pension schemes, and on old age income poverty.\n- Costa Rica is entering a demographic transition which will see the old age dependency ratios significantly worsen in the coming 20 years.\n- The long-term financial sustainability of the general social security pension scheme (IVM) is a concern despite various reforms introduced over the past three decades; the scheme’s reserves are expected to be exhausted by the mid-2030s."
    },
    {
      "heading": "Government proposal and stated objectives",
      "content": "- The government’s proposal intends to address:\n  - financial sustainability,\n  - the adequacy of coverage and of benefit levels,\n  - distributional equity\n  - through the introduction of a universal basic pension."
    },
    {
      "heading": "IMF assessment — fiscal and scheme impacts",
      "content": "- The IMF team’s assessment is that the proposal is unlikely to fully meet its stated objectives.\n- Key findings:\n  - The proposal will worsen social security pension scheme’s financial sustainability and create additional financing needs.\n  - This will translate into an accelerated exhaustion of IVM reserves and, after the reserves are depleted, require significant adjustments to IVM parameters or higher government transfers.\n- Implications:\n  - Greater near-term fiscal pressure and a need for new financing or benefit/parameter adjustments once reserves are exhausted."
    },
    {
      "heading": "Alternative policy approaches recommended",
      "content": "- Old age income security may be more effectively addressed, with less pronounced fiscal side-effects, through:\n  - improving coverage and compliance in IVM, and\n  - expanding the reach of the social pension scheme.\n- Primary instruments for achieving these goals:\n  - (a) amending the rules undermining compliance with registration and wage reporting regulations in the contributory schemes,\n  - (b) improving coordination between tax and contribution collection agencies,\n  - (c) amending the regulations governing eligibility for noncontributory social pensions, and\n  - (d) ensuring the noncontributory social pension is adequately financed."
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      "content": "- Date: May 17, 2024\n- Pages: 55\n- Series: Technical Assistance Report No. 2024/043\n- DOI: https://doi.org/10.5089/9798400276705.019\n\nSource: Costa Rica: Technical Assistance Report-Universal Basic Pension: Objectives and Constraints\n\n---\n\n Content in this bundle\n\n- Tarea2024043\n  - Tarea2024043 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Tarea2024043 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/technical-assistance-reports/issues/2024/05/24/costa-rica-technical-assistance-report-universal-basic-pension-objectives-and-constraints-549458"
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    "Published: May 17, 2024",
    "Series: Technical Assistance Reports",
    "DOI: https://doi.org/10.5089/9798400276705.019",
    "At the request of the Ministry of Finance, a mission from the International Monetary Fund visited San Jose to assess the proposal to a universal basic pension and to estimate its fiscal and welfare impact on the budget, on pension schemes, and on old age income poverty.",
    "Costa Rica is entering a demographic transition which will see the old age dependency ratios significantly worsen in the coming 20 years.",
    "The long-term financial sustainability of the general social security pension scheme (IVM) is a concern despite various reforms introduced over the past three decades; the scheme’s reserves are expected to be exhausted by the mid-2030s.",
    "The government’s proposal intends to address:",
    "The IMF team’s assessment is that the proposal is unlikely to fully meet its stated objectives.",
    "Key findings:",
    "Implications:",
    "Old age income security may be more effectively addressed, with less pronounced fiscal side-effects, through:",
    "Primary instruments for achieving these goals:",
    "Date: May 17, 2024",
    "Pages: 55",
    "Series: Technical Assistance Report No. 2024/043",
    "DOI: https://doi.org/10.5089/9798400276705.019",
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