The Dominican Republic's Pensions Superintendency (SIPEN) has released the results of a study produced with the World Bank assessing the functioning and sustainability of the Dominican Pension System (SDP) by analysing workers’ labour histories and contribution density, with a focus on labour informality and its impact on pensions. The research splits workers into contributors to the SDP (formal) and non-contributors (informal) and finds that the longer an individual remains contributing or not contributing, the less likely they are to switch status, with transition patterns varying mainly by age and income. Younger cohorts show a more polarised labour force, including extended periods without contributions, while older cohorts show more movement between formality and informality. Methodologically, the study applies a survival and duration modelling approach to estimate entry and exit risk rates, then uses Monte Carlo simulations to project complete labour histories. It also notes that, while the current system design provides coverage to the population over 60, implementation of the solidarity pillar in Law 87-01 combined with labour market dynamics may limit the system’s ability to guarantee lifetime minimum pensions, and it recommends reviewing key parameters, particularly those tied to eligibility for the guaranteed minimum pension.
Pensions Superintendency (SIPEN) 2025-06-30
Dominican Republic's Pensions Superintendency publishes World Bank-backed study on labour informality and minimum pension sustainability
SIPEN and the World Bank released a study on the Dominican Pension System, focusing on labour informality's impact. It highlights that prolonged contribution or non-contribution affects workers' status changes, with younger cohorts showing more polarisation. It recommends reviewing eligibility parameters for the guaranteed minimum pension due to potential limitations in ensuring lifetime minimum pensions.