If you contribute to your pension in Costa Rica, you have probably heard the term pension reform several times in recent weeks. The proposal under public consultation would divide the Mandatory Pension Regime (ROP) into two funds and use age as the criterion. The question people ask most often is simple: which group do I fall into, and what changes for me? Here we explain the logic of the proposal, what the sources already say, and what is still unknown.
What changes: two funds and an age criterion
According to La Nación Costa Rica, the ROP reform seeks to separate the system’s assets into two funds in order to adjust investment strategies to the needs of each member. The assets of retirees and of those aged 55 or older would be automatically transferred to the Benefit Administration Fund (FAB). Those under 55 would remain in the Pension Accumulation Fund (FAP).
Both funds would be managed by each complementary pension operator (OPC). The main difference lies in the investment strategy and, therefore, in the return expected from each one.
The logic behind the change: risk according to time remaining
To understand the proposal, it is worth recalling a basic investment principle: higher risk brings greater volatility, but also greater potential for long-term returns. A person with decades ahead can tolerate temporary declines in exchange for pursuing better results. Someone close to retirement usually needs stability, because a sharp drop just before retirement has a greater impact.
Teletica explained that the Superintendencia de Pensiones (Supén) proposes this criterion by considering the investor’s profile. Hermes Alvarado, an official at the Supén, told that outlet that the idea has been under discussion for more than 15 years and that it now gains strength because of what happened in 2022, when a drop in returns affected those closest to retirement the most.
If you are under 55
According to Supén information reported by La Nación Costa Rica, the return on the FAP would be similar to what the ROP currently generates, which operates with a single fund. Róger Porras, general manager of Popular Pensiones, said this fund would maintain a portfolio oriented toward assets with better long-term prospects, although more exposed to market volatility. Ana María Brenes, manager of BAC Pensiones, explained that the idea is to pursue higher returns for those with more time to take on that risk.
If you are 55 or older
For this group, the Supén estimates a lower return, because the FAB strategy would take on less risk. Porras described this fund as more conservative, with lower volatility and more moderate return expectations. Brenes presented it as a less volatile option for those who need it. In other words, the proposal seeks to provide more stability at the cost of a potentially lower return.
What is still not defined
The proposal does not set additional investment management rules or specific limits for each fund, according to the Supén’s Press Office. Each OPC will have to define its own investment line for each fund, within the regulatory framework and the limits set by the regulator. Marco Vargas Aguilar, of BN Vital, pointed out along the same lines that concrete policies would be defined under those conditions. Brenes, for her part, acknowledged that operational implementation details are still pending.
In addition, the available material does not say when the reform would take effect, although this is one of the most frequent questions. Nor does it detail how much the amount of a specific pension could vary, because that depends on each case, the accumulated contributions, and the actual return of each fund.
Why it matters now
The debate is not minor. The ROP covers millions of members and manages a considerable amount of assets, according to figures that La Nación Costa Rica attributes to the Supén. For that reason, any change in how those assets are invested could affect a large part of the population. Following the public consultation and reviewing the information from your OPC is the best way to understand what it means for your case.
The essentials
- The proposal splits the ROP into two funds: the FAP for those under 55 and the FAB for those aged 55 or older, including retirees.
- The difference lies in the investment strategy: the FAP would take on more risk and the FAB would seek more stability.
- According to the Supén, the return on the FAP would be similar to the current ROP return, and that of the FAB would be lower.
- Each OPC will define its own investment lines within the regulations.
- There is still no effective date and no details on the impact on a specific pension amount.
Santé Press Insight
Key takeaways
- The central dilemma is time. The proposal assumes that someone far from retirement can take on more volatility, and someone close to it needs more stability. Both positions have costs: less stability or more modest returns.
- Age is the criterion, not performance. Separating by age does not guarantee better results; it defines how risk is distributed between groups.
- The details are in the regulation. Since implementation will rest with each OPC under Supén rules, the real differences will depend on those definitions.
What to watch
- The effective date, which the available material does not answer.
- The investment limits and management rules that are defined for each fund.
- The actual returns of the FAP and the FAB compared with the Supén’s projections.
Question for you: if you could choose between more stability or more potential return for your pension, what would you prioritize based on your age and situation?
News sources
- La Nación Costa Rica: Reforma a pensiones del ROP: estos son los cambios para su pensión según la edad que tenga
- Teletica: En Profundidad: ¿Por qué se propone crear dos fondos con el ROP?
- La Nación Costa Rica: ¿Cuándo entraría en regir la reforma que dividiría el ROP en dos fondos? Jerarca de la Supén responde