DDP 746. Daniel Dulitzky. "Pensions Systems in Central America: 1999 Report." February 2000. 30 pp. Central America Project Series

This paper describes the current state of social security systems in five countries in Central America: Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. Particular attention is given to efficiency aspects of the systems, like the way systems collect contributions, the degree of evasion and coverage, and what kind of services they provide to the contributors. The paper also summarizes information related to the financial status of the systems, as well as other indicators of performance like average pension, expenses and revenues, etc. Even though there are significant differences among these countries’ social security systems in terms of maturity, coverage, and efficiency, most programs would benefit from adopting simple measures like computerization of records (to reduce time required to process claims), and the separation of health from old age insurance. Some information is also provided regarding both voluntary and mandatory private pension funds, which have been introduced recently in Costa Rica and El Salvador respectively.

Keywords: Central America, old age insurance, pensions, retirement, social security

JEL Codes: H55

Daniel Dulitzky has a Ph.D. in Economics from MIT. He has worked for HIID, The Urban Institute in Washington DC (research on private pensions and incentives to early retirement), and currently (August 1999) is working at The World Bank.