Country profiles

Costa Rica

Country profiles

Costa Rica

Complementary pensions (Mandatory)

Updated: 31 December 2017
Regulatory Framework

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 is multi-pillar. Basic coverage is provided by the Regimen Invalidez, Vejez y Muerte (IVM) - a contributory, earnings related public pension. Supplementary coverage is provided through Régimen Obligatorio de Pensiones (ROP) - a mandatory savings program based on individual accounts - while voluntary DC Personal Pensions are available to those who wish to join them. A social assistance program -Pensiones del Régimen No Contributivo (RNC) provides a means tested minimum income guarantee.

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.
The pension funds and the respective plans are managed exclusively by Operating Pension Companies (OPCs). These are legal entities of Private Law or public capital constituted for the purpose as public limited companies, which are subject to the requirements, rules and controls provided for in Law N°7983 and its regulations. The SUPEN must authorise the operation of the operators and provides the additional requirements that these entities must comply with, in order to protect the savings of the workers and ensure the efficiency of the system.

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).


Covered population

The ROP - is by far the most important private pension element in terms of coverage. Membership is mandatory for workers. Self-employed persons are not allowed to participate in the ROP, they can contribute through a voluntary pension plan.

Enforcement of affiliation

An OPC will offer a specific ROP fund, and workers choose their OPC. As there are six (6) OPCs, there are also six (6) ROP funds to choose from. Workers who do not choose an OPC are assigned, by SICERE, to the default ROP fund run by BPDC Popular Pensiones or - in the case of teachers - the ROP fund run by the Magisterio Nacional (Vida Plena OPC). An OPC can run several funds - the others being related to voluntary personal pensions or the Labour Capitalization Scheme.

Sources of funds

The aggregate mandatory contribution rate to the ROP is 4.25% of wages. The employee pays 1%, while the employer pays 3.25%. Some of the contributions paid by employers came from reallocation of social contributions.

Member contributions

Employees contribute to the ROP in accordance with Article 13 of Law N°7983, as follows:
1% of employee contribution is coming from Banco Popular

Employer contributions

Employers contribute to the ROP in accordance with Article 13 of Law N°7983, as follows:
a) 0.25% of employer contribution is coming from Banco Popular
b) 1.5% of employer contribution on salaries and wages from employed
c) 1.5% of annual transfer of 50% of the employer contribution to the Labour Capitalization Fund (LCF).

Other sources of funds


Methods of Financing

ROP is a define contribution system, based on individual accounts run by OPCs.


Asset Management

OPCs set up pension funds and offer these to their clients. The process and requirements for setting up a pension fund is clearly described in the legislation requiring among other clear legal documentation of management, investment strategy and risk management functions to be set up. The legislation stipulates that within the legal framework funds must be invested for the benefit of the members, seeking a necessary balance of security, profitability and liquidity in line with its purpose.

In order to secure sufficient independent control, the board of directors must form a permanent investment committee and a permanent risk committee, and it must have an internal auditor and an internal risk unit. These committees must report regularly to the board of directors.

The management of the pension fund is the responsibility of the OPC and the board of directors must approve the investment strategy and oversee its execution.

The Law 7983 specifies an investment framework for OPCs. It sets out a number of clear quantitative investment limits. Also, CONASSIF/SUPEN can set further regulatory limits in order to secure proper risk diversification and regulate potential conflicts of interest. OPCs must invest at least 15% of the funds related to the ROP in mortgage backed securities - required that they yield an adequate return. SUPEN may authorize investment of up to 25% in foreign assets. CONASSIF may authorize an increase of this limit to up to 50%. CONASSIF has indeed authorized a 50% limit since 2007.

According to the Investment Regulation (currently a proposal is being analysed by CONASSIF), regulated entities must comply with the following maximum limits for investment securities (Source: SUPEN, Investment Regulation):


Table 1: Limits on Investments in securities of domestic issuers

Limits Characterisation   Up to
Sector Government and Central Bank (BCCR)  50%
 Public sector  35%
 Private sector  100%
Instruments Debt securities of issuers supervised by SUGEF,
term maturity least 361 days
 Participation Titles  10%
 Repurchase or repo  5%
 Common shares and Preferred Shares  10%
 Private sector debt securities  70% depending on the risk rating of the issue
By issue and issuer The same issuer (except BCCR and Ministry of Finance  10% depending on risk rating of the issue
 The same investment fund  5%
 The same group of financial conglomerate  10%
 The same issuer Common Shares or Preferred Shares  5%

Source: SUPEN, Investment Regulation


Table 2: Limits on Investments in securities of foreign issuers

      Limits                                       Characterisation                                   
 Up to
By issuer   
 The same issuer 10% depending on the risk rating of the issue
 The same society of Investment Funds  10%
 The same Investment Fund  5%
 The same issuer, its subsidiaries and members  10%
 Debt instruments  50% depending on the risk rating of the issue

Source: SUPEN, Investment Regulation


Preservation, portability, transferability

Workers can choose any OPC or will be assigned to a default option. They may switch freely their OPC every 30 days though the electronic system managed by SICERE or visit their current OPC. Benefit funds are managed until 2025 in the same funds as accumulation.

Retirement Benefits

Benefit qualifying conditions

ROP pension savings can be paid out when the individual is eligible for pension benefits under the IVM scheme or an Alternative Regime. SUPEN has approved a wide range of benefit pay-out options - programmed withdrawal, permanent income, annuity products with varying degrees of guarantee and lump sums. The latter is intended to be an exception and only applies if the accumulated savings for potential programmed withdrawal are less than 10% of the individuals' basic pillar benefits. 

A worker or its survivors can obtain pension benefits by presenting to the OPC a certificate showing they have met the requirements for the Old Age, Disability and Death Pension Scheme of the Costa Rican Social Security Institute or of the Alternate Regime. The OPCs will have a maximum of ninety calendar days to pay the member's benefits.

According to article 20 Law 798, a worker who does not retire under any of the first pillar pension schemes will have the right to withdraw the funds from his individual account when reaching the age established in regulations issued by the CCSS´s Board of Directors (IVM administrator), currently set at 65 years.

Withdrawal of funds before retirement


Benefit structure / formula

Members must use their funds to buy a life annuity, claim a programmed withdrawal or permanent income. Exceptionally, they can obtain a lump sum. The default option is the permanent income.

Members may choose one or both forms and can change only within products managed by OPCs or to buy a life annuity.

Products offered by OPC

- Programmed withdrawal: is determined as a personal annuity, it has two primary functions. The first one is to evaluate if the pensioner should take a benefit product or can opt for a lump sum, the latter if the amount of programmed withdrawal is less than 10% of the basic, i.e. state pension. The second function is monthly payment.

Programmed withdrawal is defined as pension mode in which the participant or beneficiary contracts with the OPC a regular income (monthly) that arises from dividing the accumulated balance in the individual account by the amount of pension actuarial value required per unit. Phased withdrawal must be reviewed and adjusted annually. In the regulation the Superintendent defines the technical rate (3% at present) and the Authority regulates and publishes the mortality tables (dynamic mortality tables (w = 115)).

- Permanent income is an arrangement where the investment returns are paid out to the individual, while the nominal capital stock is paid to dependants at the death of the individual. The monthly amount is set to one-twelfth of the net return registered in the individual account during the last twelve months. The payment will remain unchanged for twelve months and will correspond to the determined amount. After the twelfth month the amount will be recalculated as stated before.

- Lump sum is an option at the retirement if the amount of programmed withdrawal is less than 10% of the pension (benefit) paid by the basic scheme.

Products offered by Insurance Companies

- Life annuity is a pension mode through which the insured or beneficiary contract with an authorized insurance company the payment of an income from the time the contract is signed until the death of the pensioner, using his/her balance. Pensioners can also opt for a Pension annuity with guaranteed period or Pension annuity with protected capital.

Benefit adjustment

Programmed withdrawal and permanent income have to be recalculated and adjusted every 12 months.


Benefit qualifying conditions

Survivors are the same (and the same proportion) as the first pillar beneficiaries. In the case no one get a pension in the basic regime, the balance will be given to the beneficiaries declared by the worker or pensioner after 12 months, this period is established in the Pay-out Regulation as prudent rule for the claim of the first pillar pension.

Benefit structure

If there are survivors that enjoy a pension in the first pillar, the calculation of the amount of pension (also products and benefit adjustment) is the same for old age pension in the complementary mandatory scheme. If there isn´t any beneficiary in the basic of first pillar, the beneficiaries appointed by the worker or pensioner are entitled to withdraw the balance as a lump sum.

Benefit adjustment


Benefit qualifying conditions

When a worker got a disability pension in the first pillar regime, he must opt for a product in the complementary pension scheme (ROP). Products, default option and the amount of pension are the same for old age complementary. There is no partial disability benefit.

Benefit structure


Benefit adjustment

Protection of Assets

OPCs must hold the fund assets completely separate form their own assets.

Financial and Technical Requirements / Reporting

Each OPC has to keep a minimum paid-in capital of CRC₡250 million adjusted by price index. Additionally, each OPC has to maintain a special reserve of at least 0,25% of the managed funds, however it could be increased according to the risk taken.


Internal auditors and compliance officers, immediately, must inform their board of any irregularities which they detect in the exercise of their functions. Independent auditors, when detect any situation during the audit of financial statements, have to present to the OPC a detailed written report.

Every OPC Board must inform SUPEN when the solvency of pension funds is threatened.

Standards for service providers

Custodians have to comply with the Law 7983, CONASSIF Regulations and SUPEN directives. Custody costs are paid by OPCs.


The OPCs have to charge administrative fees only on assets under management. In 2017 the maximum fee established in the regulation is 0.50% per annum and will drop to 0,35% in 2020.

Winding up / Merger and acquisition

In the event that a fund wound up or merged and members are transferred to another fund. They can thereafter switch to another OPC, even if the minimum stay period set by the SUPEN has not been met.

Bankruptcy: Insolvency Insurance / Compensation Fund

It is established that when some conditions arise that result in the bankruptcy or liquidation of an OPC, the Superintendent may order transfer of the respective funds management to another OPC. The SUPEN regulates the conditions under which the entirety of the funds must be transferred to another OPC. In the event of funds transferred, members can switch to a different OPC, even if the minimum stay period set by the SUPEN has not been met.

Disclosure of information / Individual action

Each OPC must:

- Provide the SUPEN with requested information.
- Publish in a timely manner any information the SUPEN specifies by means of a general resolution.
- Remit to members the information specified by the SUPEN with the frequency and format set by SUPEN.
- Provide members with any information they expressly request regarding the status of their accounts.
- Maintain the confidentiality of members' information, without prejudice to any information required by competent legal authorities and by the SUPEN for performing the functions set forth herein.
- Advertise with truthful information that does not lead to misunderstandings or confusion, pursuant to the rules issued by the SUPEN to this end.

At least twice a year (January and July) the OPCs have to give a detailed balance to each member.

Audited and quarterly financial statements have to be published in the web sites.

SUPEN is responsible for settling disputes related to private pensions. Also a possibility to settle disputes out of court through an arbitration system under the Costa Rican Chamber of Commerce exists. Decisions based on arbitration are binding. The cost of taking a matter to the arbitration system is calculated as a percentage of the estimated amount under dispute and unless the arbitration tribunal decides otherwise the fee will be split equally between the parties.


Other measures

In Costa Rica contributions are generally tax exempt, there are no taxes levied on investment returns and private pension benefits are subject to income tax, except for lump sums. In the case of contributions to personal pensions a contribution ceiling applies. Employer as well as employee contributions to personal pensions are exempt from social security contributions and income taxes provided that the contribution does not exceed 10% of the individuals' gross income.

Taxation of member contributions

Mandatory member contributions are not tax-exempt.

Taxation of employer contributions

Mandatory contributions are exempt from social security contributions and income taxes.

Taxation of investment income

There are no taxes levied on investment returns. Article 72 of Law N°7983 establishes that interest, dividends, capital gains and any other benefit produced by the domestic or foreign currency-denominated securities in which the authorized entities invest will be tax exempt.

Taxation of benefits

Withdrawn benefits in form of annuities, programmed withdrawal and permanent income are taxed as a general income. Withdrawn benefits in form of lump sum are exempt.
The Private Pension system in Costa Rica is supervised by Superintendence of Pensions (SUPEN) - one of four financial sector supervisory agencies all of which are independent institutions under the Central Bank of Costa Rica.The four supervisory authorities operate under the direction of the National Financial Oversight Council (CONASSIF).

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):
National Financial Oversight Council  (CONASSIF):
Central Bank of Costa Rica (BCCR):


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