Vol.18  No.720 Friday  Edition, July 20 , 2018 Fourth news page
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Government has reduced luxury pensions

By A.M. Costa Rica staff

The government announced that it saved ₡6.2  billion colones from January 2017 to June 2018 due to a reduction in payments for so called luxury pensions to 401 persons.

According to the government, the maximum payment for luxury pensions is now ₡2.7 million per month, approximately $4,800 per month.

The only officials who still receive a larger amount on pensions are employees from the National Magisterium and the Judiciary Ministry.

However, people receiving those pensions must now pay a tax on payments that exceed a base amount. As an example, a person with a pension of  5 million colones per month must now pay a tax equivalent to 800,000 colones, about 34 percent of the amount over the base.

Not all the National Magisterium retirees have to pay the luxury pensions tax as there is still a group of 304 people who are exempted by a pension agreement.

President Carlos Alvarado reiterated the commitment to do everything possible to reduce the fiscal deficit.

He added, "in a fiscal situation like the one we are facing, it is not acceptable to defend pensions with such high amounts. We must all contribute to the solution."

There is still much to be done to eliminate abuse in luxury pensions, officials said.

An additional measure is to remove the special exemption enjoyed by 340 pensioners of the National Magisterium who cannot be charged the tax on luxury pensions.

According to calculations of the National Pensions Directorate, if that exemption could be removed, the government could save ¢ 1.8 billion a year.

"We are making an important effort to accelerate the process of reviewing and sending the files to which the exoneration elimination should be applied, so that we can generate more savings," said the minister of Labor and Social Security, Steven Núñez Rímola.

 A.M. Costa Rica wire services photo       

According to calculations of the National Pensions Directorate, the government could save ¢ 1.8 billion a year.

There are three law reforms to reduce government spending in the payment of luxury pensions.

- The law that limits the maximum amount of pensions.

- The law that prohibits increasing the pensions of ex-lawmakers, by 30 percent each year.

- The law that increased the retirement age in some organizations. In this case, some government employees can request pensions even if they are younger than the standard age of 65.

- The law that decreases the amount of pensions for employees of the Judiciary Ministry.

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