A reform to the pensions of the regime where educators are quoted could create more trouble for government’s finances, since it implies a growth of the expense in pensions from the public budget.
This situation could widen the fiscal imbalance in the absence of modernization to current sales and income taxes.
On Wednesday, the legislators of the Commission with full legislative power approved in the first reading the “Reform of the Pension System and Pensions of the National Magisterium”, which would increase the expenditure of the National Budget over the next few years.
This project amends articles 4 and 31 of the Law on Pensions of the National Magisterium, regarding the Collective Capitalization Regime and the Transitional Regime of Distribution. The amendment allows workers who have moved to the Disability, Old Age and Death Regime of the Costa Rican Social Security Fund (CCSS), to return to the Pension Scheme of the Magisterium.
In this regard, Fernando Rodríguez, Acting Minister of Finance, indicated that the approval of this reform would increase public spending and weaken the finances of the Invalidity, Old Age and Death (IVM) of the Costa Rican Social Security Fund.
He also stated that in order to deal with this situation, the central government deficit, financed by debt, would have to be increased, and the weight of this decision should also be transferred to the various contributors to the pension systems.
According to the Ministry of Finance, several technical studies were carried out to measure the impact of the approval of this file on public finances.
From a database provided by the CCSS, the Ministry determined that the impact for the Treasury would be up to ¢ 11,000 million per year, with a minimum scenario of 1,847 people, and up to ¢ 30,000 million per year, with a maximum scenario of 6,010 beneficiaries.
At present, only 10% of the cost of pensions from the national budget is made from contributions and the other 90% must be financed with resources from the National Budget, i.e. taxes, so the decision of approving this project, would put more pressure on finances over the next few years.