Social Security Reforms Agreed in Nicaragua: Retirement Age To Stay at 60
NSCAG News |
on: Friday, 24 January 2014
Reforms to Nicaragua's Social Security system have been agreed by the National Assembly. According to Gustavo Porres, General Secretary of the National Workers' Federation (FNT), the measures will provide a stable and sustainable scheme which will provide guarantees for the next generation of Nicaraguans, at least until 2033.
Earlier last year, the FNT rejected proposals to increase the retirement age to 65 years and to increase workers' contributions to the scheme. The reforms, agreed by a consensus between Government, unions and the private sector, mean that the retirement age will remain at 60 and workers' contributons will remain the same as they have been, with a requirement to pay into the system for 14 years in order to qualify for entitlement to a pension. However, the amount that employers contribute will gradually increase from the current 16% to 19% in 2017.
Following protests last year led by groups of senior citizens, President Ortega issued a decree in July 2013 which changed the country's social security regulations to allow for small pensions to be extended to seniors and disabled persons who had not paid into the system for the required 14 years. This allows for small pensions to be paid to all those who have turned 60 and have paid in for at least 250 weeks. In the case of disabled people, they are entitled to receive a small pension after paying into the system for only 150 weeks.
At present, 60-65% of the economically active population in Nicaragua work in the informal sector, which means that they are excluded from the social security scheme altogether. Gustavo Porres has pointed out that in the next few years, formal employment will increase in Nicaragua, meaning that there will be more people paying into the scheme and more people covered by it.
