## Costa Rica: Technical Assistance Report-Universal Basic Pension: Objectives and Constraints

_Technical Assistance Reports, May 17, 2024_

## Source details

**Canonical URL:** [Costa Rica: Technical Assistance Report-Universal Basic Pension: Objectives and Constraints](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)

## Other formats

- [Markdown version](/en/publications/technical-assistance-reports/issues/2024/05/24/costa-rica-technical-assistance-report-universal-basic-pension-objectives-and-constraints-549458/index.md)
- [Structured JSON version](/en/publications/technical-assistance-reports/issues/2024/05/24/costa-rica-technical-assistance-report-universal-basic-pension-objectives-and-constraints-549458/index.json)
- [Bundle manifest](/en/publications/technical-assistance-reports/issues/2024/05/24/costa-rica-technical-assistance-report-universal-basic-pension-objectives-and-constraints-549458/bundle-manifest.json)

## Bibliographic details
- Published: May 17, 2024
- Series: Technical Assistance Reports
- DOI: https://doi.org/10.5089/9798400276705.019

---

### Mission purpose and context
- 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.

### Government proposal and stated objectives
- The government’s proposal intends to address:
  - financial sustainability,
  - the adequacy of coverage and of benefit levels,
  - distributional equity
  - through the introduction of a universal basic pension.

### IMF assessment — fiscal and scheme impacts
- The IMF team’s assessment is that the proposal is unlikely to fully meet its stated objectives.
- Key findings:
  - The proposal will worsen social security pension scheme’s financial sustainability and create additional financing needs.
  - 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.
- Implications:
  - Greater near-term fiscal pressure and a need for new financing or benefit/parameter adjustments once reserves are exhausted.

### Alternative policy approaches recommended
- Old age income security may be more effectively addressed, with less pronounced fiscal side-effects, through:
  - improving coverage and compliance in IVM, and
  - expanding the reach of the social pension scheme.
- Primary instruments for achieving these goals:
  - (a) amending the rules undermining compliance with registration and wage reporting regulations in the contributory schemes,
  - (b) improving coordination between tax and contribution collection agencies,
  - (c) amending the regulations governing eligibility for noncontributory social pensions, and
  - (d) ensuring the noncontributory social pension is adequately financed.

### Publication metadata (selected)
- Date: May 17, 2024
- Pages: 55
- Series: Technical Assistance Report No. 2024/043
- DOI: https://doi.org/10.5089/9798400276705.019

*Source: Costa Rica: Technical Assistance Report-Universal Basic Pension: Objectives and Constraints*

---

## Content in this bundle

- **Tarea2024043**
  - [Tarea2024043 (Markdown version)](/-/media/files/publications/tar/2024/english/tarea2024043.pdf.md){rel="alternate" type="text/markdown"}
  - [Tarea2024043 (PDF)](/-/media/files/publications/tar/2024/english/tarea2024043.pdf){rel="external" type="application/pdf"}

---

_Source: 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_