On January 1, 2011 changes to Guatemala’s pay-as-you-go (PAYG) public pension system went into effect, raising the minimum retirement age for new entrants to the labor force from age 60 to 62 and the minimum years of contributions required from 15 years to 20. Transitionally, all workers covered by the system as of December 31, 2010, are permitted to retire at age 60. However, the required minimum number of contribution years for these workers is increasing by 1 year each year until reaching 20 years in 2015. These measures were adopted to help reduce the fiscal burden caused by the aging of the population in Guatemala. Life expectancy at birth has increased from age 42 in 1950 to age 70.2 in 2010 and is projected to reach age 77.9 by 2050. In addition, the percent of the country’s population aged 60 or older has risen during the same time period, from 4.2% to 6.5% respectively, and it is expected to reach 13.3% by 2050.
The country’s public PAYG pension system covers private-sector employees, including agricultural workers and some public-sector employees. Participation for the self-employed is voluntary. Public pensions are financed by worker, employer, and government contributions. The benefit amount to 50% of the insured worker’s average earnings in the 60 months prior to retirement plus 0.5% for each 6-month period of contributions exceeding 120 months. An additional 10% of the insured worker’s pension is paid as a dependent’s supplement on behalf of a wife, partner, or disabled husband; for each child younger than age 18 (no age limit if disabled); and for a dependent mother and a dependent disabled father who are not pensioners. The minimum monthly benefit, including supplements, is 340 quetzales (approximately USD 45), and the maximum is 4,800 quetzales (approximately USD 600). Benefits are adjusted periodically according to a financial assessment of the program.
Article with courtesy of Social Security Online
Sources:World Population Prospects: The 2008 Revision, United Nations, 2008; Social Security Programs Throughout the World: The Americas, 2009, US Social Security Administration; "Guatemala Aumentó a 62 Años la Edad para Jubilarse," La Nación, el 1 de enero de 2011; "En Pie Cambio de Edad de Jubilación," Sigloxxi.com, el 12 de enero de 2011; IBIS News, Guatemala, February 24, 2011.