Drop in profitability and increase in risk for pensions funds in Costa Rica

The funds had high profitability and low risk last year in November, but the same month this year the profitability dropped and the risk increased.

Monday, December 15, 2008

In November 2007, net profits (not including commissions and inflation) for the eight operators administrating the pension funds were above 4%. In November of this year, most of them were below 2%.

Regarding the volatility of the results, it was at between 1.5% and 4% in November last year, while in November this year, volatility was between 6% and 9.3%.

The complementary pension funds handle approximately $2.5 billion from close to 1.7 million workers.

More on this topic

Workers Lend Cheap Money to the State

February 2014

The interest rate that the Government of El Salvado pays for money from the Pension Funds is not more than 1.3%, while international investors are paid more than 7%.

Ricardo Soriano, Chairman of the Committee for the Defense of Workers Pension Fund of El Salvador (Comtradefop) reported that since the year 2006, the State has forced the Pension Fund Administrators (AFP) to invest the money belonging to Salvadoran workers in Pension Certificates, initially 30% and the 45% in 2012, money which has suffered a loss greater than $938 million each year.

Flexiblity in Pension Fund Investments

March 2012

Given the low returns from pension funds in El Salvador, there is discussion on removing the requirements for operators in order to invest in more instruments.

The pension fund administrators (AFP in Spanish) and the government are exploring alternatives for increasing the profitability of the pension savings system.

Costa Rican pension funds sacrifice profits to gain clients

May 2008

A fall in the yields of Costa Rican pension funds, and increases in their costs, are hitting their profits. Pension fund members are losing out too, indirectly.

The pension funds racked up 2.5 billion colons (US$8 million), some 3 billion colons less than in the same period of last year. Most funds say they are having to spend more to attract members and hold on to them.

Operators pension resent low yields

March 2008

The low yields hit the income received by the operators of pensions (OPC), and thus their profits.

Revenues from the OPC-together-were reduced by 21% in the past year, going from ¢ 3,580 million in February 2007 to ¢ 2,810 million in the past month.

The Carriers Revenues come from the commission on yields they apply to pensions obligatorias.

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