On June 6, 2017, the Board of Directors of the Department of Social Security1 (this agency is also known as “CCSS”, for its acronym in Spanish) increased the pension contributions first by .5% effective July 1, 2017, and by an additional .5% as of January 1, 2018.

In Costa Rica, all people performing paid activities, whether through an employment relationship or by individual means, are obligated to contribute to the social security system, which encompasses different social benefit regimes, one of them being the Disability, Old Age, and Death2 pension system (also known as IVM, for its acronym in Spanish). A portion of the employer’s and worker’s contributions are designated as IVM contributions. IVM contributions have been progressively increasing since 2009, when an amendment to the IVM regulations included a periodical increase chart starting at 2.50% and ending at a 3.50% in the year 2035 (percentages applicable to salaries reported for each employee).

Notwithstanding the above, last January 12, 2017, the CCSS Board of Directors unofficially announced its decision to make a direct increase of 1%, which was expected to go into effect on June 1, 2017. Such decision would impact employees´ contributions going from a current 2.84% to 3.84%. As the Government opposed such significant change, the CCSS Board of Directors suspended the January 12 resolution and resolved to establish the gradual increase.

Although the CCSS Board of Directors announced the new resolution through a public statement, this decision will become effective when it is published on the Government’s Official Gazette.