The Truths and Myths of the Pensionado Category

Many expats come to us asking about the various residency options that Costa Rica offers.

The two easiest options are, of course, when you become the parent of a Costa Rican national or when you get residency based on marriage. The simplest option besides those two choices, however, is that of Pensionado. This category, as some of you know, is applicable to those foreign nationals who receive a monthly, lifetime pension of at least $1000 USD. It does not matter if you are an 80-year-old retiree or a 30-year-old veteran, as long as you receive such a pension, you would be eligible for this category.  This $1000 need not come from only one source either as you can use a variety of pensions, as long as together it comes up to at least $1000 per month. We have had the pleasure of assisting teachers, for example, who taught in various states and schools. They have pensions from two or three providers and, when added up, the amounts qualified them for the category.

And whilst the main requirement for Pensionado seems pretty straightforward, the category does have its peculiarities. Additionally, we have noticed that there is a lot of misinformation in the Internet and even the expat groups in social media pertaining to this category. Most of this misinformation comes as a result of webpages replicating rules that were featured in our old Immigration Law that was replaced more than 7 years ago by the current one.

As such, we wanted to summarize a few important points of the Pensionado category.

First and foremost, we will address the famous Pension Letter. Evidently, to qualify for residency in Costa Rica you must prove to the government that you are either the parent of a Costa Rican national, married to a Tico or Tica, have invested at least $200,000, etc. To be eligible for Pensionado, you must present, along with the standard requirements a letter stating that the main applicant receives a monthly pension of at least $1000 USD for the remainder of his/her life.

The letter, if issued abroad, must be legalized/apostilled and translated into Spanish when applicable. Now, while the requirements of the letter seem uncomplicated, getting certain pension providers to add the words lifetime or for life has proven to be tricky. Certain applicants are lucky enough to receive their pension from the U.S. Social Security Administration. Those applicants may request their pension letters directly from the U.S. Embassy in Costa Rica. The Embassy issues letters with the format demanded by Immigration, making everyone’s lives easy.

However, there are Pensionados from other nationalities as well as those who receive pensions from private pension providers. In those cases, in order to ensure the success of the application, the letter must state what has already been mentioned: that the applicant receives a lifetime monthly pension of X amount, X being equal to or greater than $1000 USD.

The lifetime requirement is crucial. We have had numerous expats ask about short term pension plans that provide $1000 USD a month. One example is the individual retirement account (IRA) for U.S. nationals. These sorts of plans unfortunately do not work for the Pensionado category since they are not issued for life and instead are for a certain number of years which challenges one of the vital requirements of the category, the lifetime factor.

Now, unlike what you might read on-line, the $1000 USD is enough to cover the entire family. For example, if you are applying with your spouse, the $1000 USD will cover both of you. Our previous law did state that for every dependent that applied, additional money would be required. This meant that if it was principal applicant plus their spouse, the pension had to be of at least $1200 USD because one had to add $200 per dependent. That is no longer the case.

It is important to note, however, that one of the spouses needs to be the primary recipient of the pension. This person will be deemed the principal and their spouse will be the dependent. To qualify for the Pensionado status, it is not possible to add the pension of both spouses together to reach the minimum $1000 USD goal. One of the spouses has to receive the minimum required income to be able to apply.

Another myth is that the pension that you receive must be deposited in a Costa Rican bank. That was in the past. Now, as long as you prove that you receive the pension, that should settle it. The government no longer needs to see that the money is being deposited in a Costa Rican account. However, people who obtained the residency under the previous law and have not had their status changed to Permanent may still be required to have the pension deposited in Costa Rica.

It is also false that Pensionados need to spend a certain number of months in Costa Rica a year. That is a myth we tackled a few months back in an article that you can read here.

Finally, when it comes time to renew, Immigration will ask applicants to produce a new Pension Letter. This seems absurd and against all logic as the original letter must have said that the pension was for life. Unfortunately, and even if a little goofy, the current rule states that a new Pension Letter must be presented to renew. The letter must be recently issued (no older than 6 months) and, when applicable, legalized/apostilled and translated.

All in all, the Pensionado category is one of the more popular and easy categories our law offers. It ultimately allows expats to enjoy their retirement as they please.