Complementary pensions (Mandatory)
2000: Law N° 7983 (Law on Worker Protection), creates and sets the framework for regulation of pension funds; authorises, regulates and establishes the framework for monitoring the functioning of complementary pension schemes, public and private pensions, which provide protection in cases of disability, old age and death. Also, it establishes supervisory framework for participating entities when establishing and managing different pension programs that constitute the National Pension System and sets a control system for the proper administration of the workers' savings.
1997: Law No. 7732 (The Sock Market Regulatory Law- Amended by Law 7983), creates the National Financial Oversight Council (CONASSIF), establishes the Superintendent duties and Superintendence of Pensions (SUPEN)'s fee funded structure.
1995: Law N°7523 (The Private Complementary Pension Scheme Law -Amended 2000 by Law 7983), contains the sanctions regime. In Articles 40 to 62 of the Law N°7523, the sanctions regime includes matters related to the precautionary measures, the degrees of offenses and sanctions, as well as the supervision and implementation of sanctions and disciplinary powers.
Regulation approved by the National Financial Oversight Council (CONASSIF)
2017: Risk Regulation, gives guidelines to Operating Pension Companies (OPCs) in the process of identification and management of risk, defines the way in which the Superintendence oversees and evaluates OPCs' risk management, establishes the capital adequacy of the OPC and situations of financial instability or irregularity in the funds managed.
2016: Corporate Governance Regulation, establishes the principles of corporate governance that OPCs should consider. Each OPC designs, implements and evaluates its corporate governance framework in accordance with its detailed attributes, for which it must consider the laws that are applicable to it, the size, ownership structure and legal nature of the entity, as well as the scope and the complexity of its operations, the corporate strategy, the risk profile and the potential impact of its operations on third parties.
2016: Actuarial Regulation: establishes that the guidelines are mandatory when conducting actuarial valuations of defined benefit pension schemes regulated by the Superintendence of Pensions, and other schemes that imply collective capitalization in their pay-out phase.
2010: Regulation of Pay-Out Phase for Individual Capitalization Schemes; regulates the benefits regime established in Title III, Chapter III of the Law N°7983. The regulation refers to the general provisions, the pension arrangements, requirements to acquire the right to receive the complementary pension formalities pensions, payment of the complementary pension.
2008: Mortality Tables Regulation (Amended in 2014); establishes the mortality tables that must be used to calculate the programmed withdrawals by OPCs and the technical reserves of the DB schemes, either alternative or complementary occupational to IVM.
2003: Investment Regulation (last amended on June 2017); sets out a number of clear quantitative investment limit to secure proper risk diversification and regulates potential conflicts of interest.
2001: Regulation of Authorized Entities and Operation of Pension Funds, Labour Capitalization and Voluntary savings under the Law on Worker Protection, covers topics related to the merger of the authorized entities, promotion agents, fee structure, capital adequacy, membership and contributions to pension plans, forms of retirement, shift of savings to another provider, transfer of resources, disclosure to members, deal with complaints and sanctions.
The Costa Rican pension system offers different levels of protection and different protection architecture to different population groups. Hence, there are two diversions from the relatively simple general structure described above. Firstly, some groups in the public sector are outside the IVM. Instead they are covered by Alternative Regime Schemes. Secondly, some groups in the public sector enjoy additional supplementary coverage through Special Occupational Schemes - such coverage comes on the top of the coverage provided by the IVM and the ROP.
Mandatory Complementary Pension Scheme (ROP): is an individual capitalization fund that is complementary to the social security regime and mandatory in nature. The general conditions of affiliation to the pension operators, the transfer of funds amongst the operators, the resources that compose the regime and the access to its benefits are established in the articles 9-21 of Law N°7983. The ROP was set up in 2000, and participation is mandatory for all Costa Rican workers. ROP schemes are run by OPCs.
OPCs have the following activities as their primary corporate purpose:
a) Management of the plans.
b) Management of the funds.
c) Management of the benefits deriving from the systems established herein.
d) Management of the individual accounts.
e) Management through contracts, under the terms specified in the respective regulations, of complementary pension funds created by special laws, collective agreements and employers' association agreements, and funds contracted with solidarity associations.
f) Provide management and other services to the other bodies overseen by the Superintendence of Pensions.
g) Any other activities that are similar or related to the preceding activities and authorized by the Superintendence of Pensions.
OPCs are held jointly and severally liable for any losses incurred to the contributions and yields of workers subscribed to the Mandatory Complementary Pension Scheme deriving from the malicious or culpable acts of their officers and employees as declared by the courts. In these cases, the operators will be answerable with their assets, without prejudice to any administrative or criminal actions that may be brought for these acts.
There are currently six (6) OPCs managing ROP schemes in Costa Rica. While the fund administration is decentralized, contribution collection for the ROP is centralized and handled by SICERE - the collection branch of the Costa Rican Social Security Institute (CCSS).
Enforcement of affiliation
Sources of funds
Other sources of funds
Methods of Financing
Preservation, portability, transferability
Benefit qualifying conditions
Withdrawal of funds before retirement
Benefit structure / formula
Benefit qualifying conditions
Benefit qualifying conditions
Protection of Assets
Financial and Technical Requirements / Reporting
Standards for service providers
Winding up / Merger and acquisition
Bankruptcy: Insolvency Insurance / Compensation Fund
Disclosure of information / Individual action
Taxation of member contributions
Taxation of employer contributions
Taxation of investment income
Taxation of benefits
CONASSIF has seven members. Five members - who cannot be civil servants - are appointed by the board of the Central Bank. One of these members must be taken from a list of candidates proposed by the Assembly of People's Bank Workers and Community Development. The Minister of Labour and the President of the Central Bank are permanent members. The chairman of CONASSIF will be elected by and is among the five appointees.
CONASSIF appoints the Superintendent and the Intendent of SUPEN for a term of 5 years with the possibility of reappointment for any number of terms.
Superintendence of Pensions (SUPEN): https://www.supen.fi.cr
National Financial Oversight Council (CONASSIF): http://www.conassif.fi.cr
Central Bank of Costa Rica (BCCR): http://www.bccr.fi.cr
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