President Of Costa Rica acts to reduce luxury pensions

President acts to reduce luxury pensions

By A.M. Costa Rica staff

President Carlos Alvarado met with the magistrates of the Constitutional Chamber on Thursday, to request that the bill that would limit the pensions of senior government officials and other public organizations be analyzed.

The president said he has developed a series of actions aimed at making “pension systems fair and sustainable.”

According to the report of the Pension Board, luxury pensions are retirement benefits that far exceed the money that the beneficiaries earned during their working life, which forces the rest of taxpayers to pay the difference in government taxes. Some of these luxury pensions reach up to $23,600 per month.

A second group of pensions, called ‘high pensions’ are also amounts well above the average of a government employee’s pension. According to the official report, there are almost 3,800 pensioners who receive more than $5,000 per month for a total of $228 million annually.

In these circumstances, President Alvarado asked the magistrates to complete the analysis of the law that would lower these pensions more quickly. “I came in the morning hours to advocate for the end of luxury pensions in Costa Rica. Today, the trust of citizens in their institutions is at stake and we are facing an opportunity to do the right thing,” said President Alvarado.

With the conviction that “pensions are to protect not to get rich,” President Alvarado has reiterated that this issue is a priority in his management to achieve fair and sustainable regimes in Costa Rica.

According to the government, in 2016 when President Alvarado was the Minister of Labor, a law was passed to eliminate the automatic 30 percent increase in pensions for a group of former deputies.

The actions taken by the president to put a cap on the pensions of public employees, has achieved savings of $822,000 for the reduction of pension amounts to about 500 pensioners.

That law, however, was suspended because of an appeal that continues in analysis in the Constitutional Chamber.

“Pensions are to protect not to get rich,”
said President Alvarado.

Responding to the request of the president, Fernando Castillo, president of the Constitutional Chamber, announced that he will finally resolve the ‘unconstitutionality actions’ filed against the ceiling on luxury pensions before November 18.

According to the bill to limit luxury pensions, the maximum pension for public employees would be $4,600 per month but this maximum limit would be applied only in a few cases.

According to the Social Security report, there are 4,200 elderly, indigent, disabled or orphaned people in poverty who belong to the pension system of the Non-Contributory Regime. This system applies to people who have a job and do not meet the minimum requirements for retirement.

Ubaldo Carrillo Cubillo, director of Pension Fund, explained, in a statement, that “these pensions reach people in poverty or extreme poverty and additionally, are over 65 years of age, people with disabilities, orphans, destitution and deep brain paralysis.”

Pensions for these people are $131 per month, with the right to receive the aguinaldo, or Christmas bonus and medical attention in Social Security.

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