Dominican Republic

The social security in Dominican Republic is regulated by a law of 2001, implemented in 2003 and amended in 2007. The law provided for a mixed system with mandatory individual account and social assistance system. The system of mandatory individual accounts for public- and private-sector workers began in June 2003. Participation is mandatory for new entrants into the workforce and for those aged 45 or younger in June 2003. However, participation is voluntary for public-sector workers. Subsidized individual accounts for self-employed persons are yet to be implemented.

Pensioners who began receiving their pension before June 2003 and public-sector employees who opt not to join the mandatory individual account system are covered in the social insurance system, which is being phased out.

The mandatory individual account pillar covers all private-sector workers and employers. Voluntary coverage is available for Dominican citizens living abroad, public-sector workers, and private-sector workers older than age 45 in 2003. Self-employed persons are excluded from the system.

The social assistance pillar covers severely disabled, needy, unemployed, and self-employed persons with income below the legal minimum wage.

The funds are contributed to the mandatory individual by both the insured person and its employer in the following proportions: (i) Insured person: 2.87% of covered earnings. Of the total 9.97% of insured person and employer contributions, 8% is directed to the individual account, 1% to disability and survivor insurance, 0.5% to administrative fees for the pension fund management companies (AFPs), and 0.07% to the operating costs of the Superintendent of Pensions; (ii) Employer: 7.10% of covered payroll. Of the total 9.97% of insured person and employer contributions, 8.0% is directed to the individual account, 1% to disability and survivor insurance, 0.4% to the solidarity fund to finance the minimum guaranteed old-age pension, 0.5% to administrative fees for the pension fund management companies (AFPs), and 0.07% to the operating costs of the Superintendent of Pensions. The minimum earnings for contribution calculation purposes are equal to the legal minimum wage. The maximum earnings for contribution calculation purposes are 20 times the legal minimum wage.

Mandatory individual account are subsidizes by the Government, which contributes the cost of the guaranteed minimum pension, partially finances the subsidized mandatory individual accounts, and finances accrued rights for those who made contributions under the social insurance system. Further, the social assistance programme is fully financed by the Government.

The old-age pension (mandatory individual account pillar) is available at age 60 with at least 30 years of contributions. Pensioners are not required to cease gainful activity. The minimum old-age pension is equal to the lowest legal minimum wage.  The pension is not payable abroad.

Early pension is available at (i) age 55 if the individual account balance is sufficient to finance a pension equal to the minimum pension; (ii) age 57 to 59, if the insured person is unemployed and has at least 300 months of contributions; (iii) with less than 300 months, the insured can receive a pension based on the accumulated funds or continue contributing to reach 300 months.

There is a guaranteed minimum pension (taken out of a solidarity fund), available at age 60 with at least 30 years of contributions and insufficient accumulated capital plus accrued interest in the individual account to finance the minimum pension set by law.

The social assistance old-age pension is available at age 60 and is income-tested.

The old-age pension is based on the value of the accumulated capital plus accrued interest, which can be used to purchase a price-indexed annuity or to make programmed withdrawals. In case of early pension, the  maximum amount is equal to the insured’s final salary. The minimum old-age pension is equal to the lowest legal minimum wage for all groups. Benefits are adjusted according to changes in the minimum public-sector legal minimum wage.

Social assistance old-age pension is 60% of the public-sector legal minimum wage (plus a Christmas bonus). Benefits are adjusted according to changes in the consumer price index.

The system is administered by (i) the National Social Security Board (CNSS) (http://www.cnss.gob.do), that provides overall governance of the social security system; and (ii) the Superintendent of Pensions (SIPEN) (http://www.sipen.gov.do), that provides general supervision. In addition, private pension fund management companies (AFPs) administer the individual accounts and contract with insurance companies for disability and survivors insurance.

 

Source:Social Security Programs Throughout the World: Asia and the Pacific, 2010, available at http://www.ssa.gov/policy/docs/progdesc/ssptw/2010-2011/asia/index.html

 
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