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  • The government opted to maintain the retirement age, the duration of mandatory contributions and the reduced pension.

    The government opted to maintain the retirement age, the duration of mandatory contributions and the reduced pension. | Photo: EFE

Published 20 April 2018

Supporters claim government reforms are better than proposals by the IMF and business sectors to raise the retirement age and duration of required contributions. 

Three people were killed in Managua, Nicaragua, Thursday when hundreds of protesters clashed with anti-riot police while state workers and Sandinista Youth demonstrated in support of new social security reforms

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A police officer, protester and pro-government activist were killed. National Police said the officer was killed by a shotgun blast and the protester – a student at the National Polytechnic University – died as a result of "a dispute between gangs."

The activist was killed by a gunshot in Tipitapa, a city outside of the capital of Managua, where supporters of the Sandinista government have been involved in clashes, police said.

At least 33 people were also injured during the two consecutive days of protest, according to Nicaragua's Red Cross.

The proposed reforms include a 0.75 percent increase in monthly contributions for workers, from 6.25 percent to 7 percent; a 3.5 percent increase in employer's contributions, from 19 to 21 percent in June and from 21 to 22.5 percent starting January 2019.

Additionally, five percent of pensions will go towards financing medical services provided by social security, a measure many fear will reduce their future pensions.

Lastly, the reforms eliminate the cap on contributions. Before the changes were signed into law earlier this week, there was a cap of US$2,818. Now, people who receive higher salaries will have to pay monthly contributions based on their earnings.  

In the pro-reform demonstration, supporters of the Sandinista ruling party carried signs criticizing violence, demanding peace and calling for 'Love to Nicaragua.'

National Unity of the Elderly President Porfirio Garcia told the crowd: "These reforms are to better the economy of the INSS (Nicaragua's Social Security Institute) to guarantee pensions and benefits."

The reforms have been criticized by business sectors, which claim the measures aren't sufficient to stave off bankruptcy and will instead cause unemployment, informality and reduced competitiveness.    

In February, an evaluating mission of the International Monetary Fund (IMF) recommended an increase in the retirement age, currently set at 60, and in the duration of mandatory contributions, currently set at just over 15 years.

Recommendations endorsed by business sectors include elimination of the reduced pension, which guarantees access to a basic income: roughly US$150 to more than 42,946 people currently living in poverty.

The INSS and the Nicaraguan government opted for an increase in contributions to maintain the retirement age, the duration of mandatory contributions and the reduced pension.

During the clashes Thursday, students hurled stones and Molotov cocktails at anti-riot police, who responded with rubber bullets and tear gas.

Nicaraguan Vice-President Rosario Murillo has ordered a police investigation to determine who was responsible for the three deaths, and warned against using violence to destabilize the country.

Incidents of pro-government violence were also reported: in Masaya, a stronghold of President Daniel Ortega, hundreds of marchers were attacked by government supporters with sticks.

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