Pensions Endangered by 2020
- Details
- Category: The Nation
- Published on Saturday, May 14 2011 01:12
- Written by Rod Hughes
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The Costa Rican pension system appears to be in the same plight as that facing the U.S. Social Security System: an aging population and fewer young workers contributing to sustain the funds. A Comptroller General Annual Memorandum for 2010 warns of diminishing funds in nine years.
The diminishing funds also include disability and death benefits as well as the minimal pensions paid to workers who were never contributors to the system.
The pension fund is administered jointly by Social Security (Caja), the teachers' retirement fund, the Finance Ministry and a special agency called the RNC. The red ink will start in 2020 but the slump in contributions is already well known.
The last census showed native population growth at 0.9%, as many Costa Rican women opted for no children. Population has continued to grow through immigration, especially from Nicaragua, but many of these workers do not contribute to Social Security. Their employers illegally neglect paying their share to the Caja.
The need for sons to help on the family farm has also reduced family size as farms become larger and more mechanized and the population more urban. Finally, there appears to be a growing desire to educate offspring, so families opt more for quality and less for quantity.
What role easily obtained contraception, formally discouraged by the predominant Catholic Church, plays in this trend has never been tested. The rise of women's rights awareness has cut the number of children so it is rare to see a family of 10 to 15 as it was not in the 1950s and '60s.
The changing demographics will also have an impact on teachers' benefits distributed by the Magisterio Nacional. With fewer children, the need for growing numbers of teachers will diminish and their contributions will, as well.
The Comptroller report also noted that an aging population will demand more from the Caja's medical arm while the income from worker contributions will diminish. The Comptroller expects the critical point to arrive in 2038.
Overall, the report estimates that senior citizens represented 6.3% of the population last year. Unless some drastic change occurs, that number will be full quarter of the population in 2060.
