government

IVM deficit rises sharply

LA PRENSA/IVÁN URIBE

more money:A proposal to tie benefits to increases in inflation could increase the IVM’s annual deficit.1033752

The deficit of the Invalidez, Vejez y Muerte (IVM) department of the Caja de Seguro Social (CSS) is expected to reach $80 million this year, $20 million more than was originally expected.

CSS Director René Luciani said that the difference is due to an increase in applications that were submitted after the Supreme Court issued a decision relaxing the retirement requirements.

In the first four months of this year, 5,800 CSS subscribers in both the public and private sectors submitted paperwork to receive retirement benefits, a marked increase from 2007.

"We did not expect this situation," Luciani said.

The Supreme Court ruling allowed employees to apply for retirement benefits while continuing to work. Previously, employees had to resign to receive these benefits. Furthermore, retirees who continue to work are not required to contribute to the CSS's retirement program, but they do have to make payments for health and disability benefits.The IVM department has run large deficits for several years. It was $67 million in the red in 2005, $62 million in 2007 and $70 million last year. Last year's increase was due to an increase payments to retirees making less than $500 a month.

The program's losses were supposed to decrease this year to $60 million, but instead will increase by about $10 million.

Luciani said that without reforms to the system that were passed in 2005, the program would be running annual deficits of more than $100 million.

The program, which has just under 170,000 retirees, distributes almost $70 million per month.

The Asamblea Nacional is considering a measure to index pension payments to inflation rates. If approved, that measure could significantly boost monthly payments.