Costa Rica Nearly Halves Non-Contributory Pension Funds for 2027
COSTA RICA · ECONOMY
Key Facts
- —The country Costa Rica, a Central American democracy of 5 million, runs public health care and its main pension fund through the CCSS.
- —The background Since 1974 its non-contributory pension has supported poor people who never paid into a pension fund, today with ₡82,000 (US$180) a month.
- —Why now The 2027 budget bill, now before Congress’s budget committee, sets state transfers to the non-contributory pension scheme at ₡90.2 billion (US$197 million).
- —What happened That is 48% less than the 2026 budget law, the Comptroller General’s office said in a review published on Wednesday 30 September.
- —The numbers About 158,000 people drew the pension in 2025, and more than 30,000 are on the waiting list for a place.
- —What it means for you The CCSS, which also runs public hospitals, says wider funding gaps add to the state’s debt to it and could strain its health-insurance reserves.
- —Still open Whether Congress moves money back, as it did for 2026, or passes President Laura Fernández’s plan to redirect part of a payroll contribution.
Costa Rica plans to cut state funding for its non-contributory pension scheme, which supports poor older people, by nearly half. The 2027 budget bill assigns it ₡90.2 billion (US$197 million), down from ₡173.3 billion (US$379 million) in 2026.
Diario Extra reported the figures on Monday 5 October from a review by the Comptroller General’s office, the state’s independent auditor. The CCSS, the social security fund that runs the scheme, says the sum will not even cover pensions already in payment.
A Pension for People Who Never Paid In
Costa Rica created the non-contributory pension in 1974 for people who never paid into a basic pension fund. That means the main CCSS old-age fund or the separate funds for court staff and teachers.
Each beneficiary receives ₡82,000 (US$180) a month, plus a year-end bonus and public health cover. Dollar figures use 457 colones to the US dollar, the market rate on 4 October 2026.
At the end of April the scheme covered 159,274 people, the newspaper La Nación reported. In 2025 it paid out more than ₡204.2 billion (US$447 million) to about 158,000 people, according to the Comptroller.
Most of the money comes from Fodesaf, a social development fund attached to the Labour Ministry. Taxes on liquor, beer and cigarettes, lottery profits and fines under the labour code also contribute.
How Deep the Non-Contributory Pension Cut Goes
The budget bill sets state transfers to the non-contributory pension scheme at ₡90.2 billion (US$197 million) for 2027. The 2026 budget law provided ₡173.3 billion (US$379 million), so the drop is ₡83.1 billion (US$182 million).
Between 2021 and 2025 the scheme received an average of ₡189.1 billion (US$414 million) a year, the Comptroller said. The proposed 2027 sum is less than half of that average.
In the bill, two budget lines that held money in 2026 drop to zero, the news site CR Hoy found. The larger one, for financing older people’s pensions, held ₡80.7 billion (US$177 million) this year.
CCSS actuaries put the scheme’s 2027 needs at ₡236.6 billion (US$518 million), covering current pensions and new ones. The bill therefore funds only about 38% of that estimate.
That leaves a gap of ₡146.4 billion (US$321 million) on the Comptroller’s count. The CCSS, which adds smaller income such as lottery money, puts its own shortfall at ₡142.3 billion (US$312 million).
The Government’s Explanation
The government’s statement of reasons, attached to the budget bill, ties the non-contributory pension cut to a shift inside Fodesaf. It says about ₡160 billion (US$350 million) more now goes to health insurance for destitute people, via the Health Ministry.
That increase, the document says, left Fodesaf no room to give programmes more than the minimum amounts set by law. The Comptroller found that the Finance Ministry redirected 19.3% of the fund’s money compared with 2026.
Labour Minister Mercedes Flores, whose ministry oversees Fodesaf, answered questions on the cuts in Congress’s budget committee. She and a senior aide said the ministry had applied percentages fixed by law, Diario Extra reported on Tuesday 29 September.
They also followed a 2021 opinion from the Procuraduría General, the state’s legal adviser. Under it, Fodesaf must pay the health insurance of people in extreme poverty, the medically destitute and the homeless.
“As public officials we are obliged to comply with the Procuraduría’s opinion,” Flores said. She added that the ministry shared lawmakers’ concern and needed them, as the ones who write the laws, to step in.
Mónica Taylor, the CCSS executive president, told the fund’s board on Thursday 24 September that the rules had changed, La Nación reported. In past years, she said, the finance and labour ministries could shift unspent Fodesaf money to programmes in greater need.
A Comptroller ruling now obliges the Finance Ministry to respect the distribution set in law, Taylor explained. Any such shift of money must therefore go through Congress.
What the CCSS Says
Jaime Barrantes, the CCSS pensions manager, put it bluntly: “Under this budget it would not be possible to meet the goals.” He said he expected an adjustment that would let the fund grant 5,000 new pensions, CR Hoy reported.
Those 5,000 pensions are the 2027 target in the government’s own National Development Plan for 2027 to 2030. The Comptroller warned that the lower non-contributory pension allocation puts that goal at risk.
The CCSS also told the Comptroller that the wider funding gaps add to the state’s debt to social security. It warned they could force it to use contributors’ money and press on its health-insurance reserves.
That debt is already large. The CCSS puts it at about ₡4.67 trillion (US$10.2 billion), while the government’s own accounts recognise only around 4% of it.
Part of a Wider Squeeze on Social Programmes
The pension scheme is not the only programme to lose. Across all transfers to the CCSS, the bill includes ₡1.16 trillion (US$2.54 billion), about 73% of what the fund requested.
That leaves ₡418.2 billion (US$916 million) unfunded, mostly in health insurance, the Comptroller found. Total transfers to the CCSS still rise by about ₡82 billion (US$180 million), largely because of care for destitute people.
The welfare agency IMAS is set to get ₡141 billion (US$309 million), ₡45 billion (US$99 million) less than it spent in 2025. Most of that cut falls on Avancemos, a cash grant for poor secondary-school students.
Programmes with no share fixed by law, such as school canteens, get nothing from the fund in 2027, Semanario Universidad reported. The child-protection agency PANI receives about ₡17 billion (US$37 million) less than it spent in 2025.
In the budget committee, Salvador Padilla of the opposition National Liberation Party (PLN) pressed the Labour Ministry on which programmes lose money. Officials named the pension scheme, school canteens, childcare and services for older and disabled people among them.
Fernández’s Plan for a Permanent Source
President Laura Fernández has proposed a separate fix for the non-contributory pension scheme. Bill 25.721, filed on Tuesday 18 August, targets a payroll contribution employers now pay to Banco Popular, a public bank.
Half of it, equal to 0.25% of wages, would go to the scheme through Fodesaf rather than straight to the CCSS. Today employers pay 0.5% of their payroll to the bank.
Fernández asked Congress on Tuesday 25 August to pass the bill “with urgency”. She wanted a permanent source of money that required no new taxes.
Without one, she asked, why raise the hopes of 30,000 older people on the waiting list? Her Pueblo Soberano party holds 31 of 57 seats and needs seven more votes to fast-track the bill, La Nación noted.
The government has relied on stopgaps before. For 2026, Congress had to move ₡70 billion (US$153 million) from housing grants and state childcare centres to complete the scheme’s budget.
What Comes Next
Congress’s budget committee is reviewing the bill, and lawmakers can still move money back into the non-contributory pension scheme. The cut concerns 2027; this year’s payments rest on the 2026 budget, which Congress had to top up.
If the gap stays, the CCSS says it cannot cover every pension in payment next year. Nor could it grant the 5,000 new pensions meant for people on the waiting list.
The proposal does not mean Costa Rica is closing the non-contributory pension scheme or cutting monthly payments. Total state transfers to the CCSS still grow, and the president is seeking a permanent funding source.
For background on the country’s politics and public finances, see Costa Rica explained. Changes in the committee and the fate of bill 25.721 will decide how large the 2027 hole becomes.
More: Latin America news in English, every day from The Rio Times.
What is Costa Rica’s non-contributory pension?
Costa Rica’s non-contributory pension is a monthly payment of ₡82,000 (US$180) for poor people who never paid into a pension fund. The CCSS runs it, and Fodesaf, a state social fund, supplies most of the money. About 158,000 people received it in 2025.
Will current pensioners stop being paid?
Not now. The cut is in the 2027 budget bill, which Congress can still change. The CCSS warns, however, that the proposed sum would not cover every pension already in payment next year.
Why did the government cut the non-contributory pension allocation?
The budget’s statement of reasons says about ₡160 billion (US$350 million) more is going to health insurance for destitute people. The Labour Ministry says the law and a 2021 legal opinion oblige it to fund that first, leaving less for other programmes.
Does this affect foreigners living in Costa Rica?
The scheme serves poor people without a pension of their own. Foreign retirees on pensionado status must already prove pension income under Costa Rica’s residency rules. The CCSS also runs public health care, though, and it warns that funding gaps could strain its reserves.
Sources: Diario Extra, RNC allocation halved, 5 October 2026; Semanario Universidad, CGR on RNC, 1 October 2026; Semanario Universidad, CCSS shortfall, 3 October 2026; Diario Extra, Labour Ministry in budget committee, 29 September 2026; CR Hoy, CCSS warning, 24 September 2026; La Nación, RNC shortfall, 25 September 2026; La Nación, Fernández bill 25.721, 25 August 2026.
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief