Who Saves for Retirement? Uneven Participation in Dominican Republic’s Pension System

A groundbreaking study led by the World Bank’s Development Research Group (DECRG), its Development Impact Evaluation (DIME) unit, and the Dominican Republic’s Superintendency of Pensions (SIPEN) provides a deep look into the performance of defined-contribution pension systems under high informality. Analyzing 20 years of administrative pension contribution records since the 2003 reform, the research evaluates who participates in the system, how regularly, and what that means for future retirement security. The reform, intended to unify fragmented defined-benefit schemes into a modern, capitalized structure, was designed to expand coverage, promote savings, and reduce fiscal burden. While affiliation has grown impressively over time, the data reveal wide disparities in actual contribution behavior, exposing gaps in the system’s inclusivity and long-term effectiveness.

The Uneven Reality of Pension Contributions

A key finding from the analysis is that the average contribution density is approximately 40 percent. This implies that, on average, workers make pension contributions for only four out of every ten eligible months throughout their careers. Contribution patterns are highly polarized: around 30 percent of affiliates contribute almost nothing, while 20 percent contribute nearly without interruption. The remaining half of workers exhibit varying degrees of contribution intensity, indicating a system where continuous participation is the exception rather than the rule.

The disparities are largely shaped by where people work and how much they earn. Workers in sectors such as finance, public administration, healthcare, and education are among the most consistent contributors, while those in construction, mining, or informal arts-related jobs are far less engaged. Geographic location matters, too. Compared to workers in Santo Domingo, those in regions like La Romana and Espaillat contribute more consistently, thanks to localized economic activity dominated by large employers or formalized industries. Income plays a decisive role: individuals earning three times the minimum wage or more are 25 percentage points more likely to contribute consistently compared to those earning less than half the minimum wage. With about half of the contributors earning below the national minimum, this disparity raises serious concerns about equitable retirement outcomes.

Younger Generations Show Signs of Progress

Despite the uneven participation landscape, there is encouraging evidence that newer generations are faring better under the system. Workers born after 1980 are entering the labor force with higher wages and greater formal participation. For instance, among those in their early 30s, the share making any pension contributions increased from about 30 percent for the 1975 cohort to nearly 50 percent for the 1990 cohort. These younger workers not only contribute more often, but also earn more consistently, meaning they are building stronger individual pension accounts than their predecessors.

The economic trajectory of the Dominican Republic over the past two decades may explain this shift. Since 2003, the country has experienced robust growth, with GDP expanding by nearly 6 percent annually. Rising wages and increased labor market stability have provided younger workers with better conditions to remain formally employed. However, the 2020 pandemic created a noticeable dip in contributions across all age groups, underscoring how external shocks can quickly undermine the progress made.

Gender Participation: A Mixed Landscape

When examining gender dynamics, the study reveals a nuanced picture. Among formal affiliates, men and women contribute at similar rates and earn comparable wages. Women are slightly more likely to be high-density contributors, those who contribute more than 90 percent of the time. Yet, women are significantly less likely to be affiliated with the system in the first place, mainly due to lower formal labor market participation. The overall gender gap in affiliation narrowed from 6.7 percentage points in 2014 to 2.6 points in 2023, suggesting steady progress, especially among younger cohorts.

However, the pension system currently relies primarily on survivorship benefits to protect women without formal work histories. These benefits offer little protection in cases of divorce or to unmarried women, reinforcing financial dependency and leaving gaps in retirement coverage. The report highlights alternative models from countries like Germany, where pension credits are split in divorce, and others that offer credits for child-rearing years or mandate gender-neutral mortality tables to ensure fair annuity payments. The Dominican Republic has yet to adopt such measures, making its system less equitable for women in the long run.

Reform Opportunities and the Road Ahead

The study closes with a strong call for reforms. The irregularity in contribution histories among many affiliates suggests a need to enhance participation continuity through behavioral nudges, administrative support, and reduced barriers to reentry. Personalized reminders, simplified digital platforms, and targeted outreach in sectors with high dropout rates could help re-engage workers. However, such interventions alone may not be enough. Structural changes, such as lowering the 25-year vesting requirement or introducing partial minimum pensions, could expand the safety net to those with fragmented careers.

Reforms should also focus on expanding gender equity. The introduction of pension crediting for caregiving periods, shared pension rights upon divorce, and neutral mortality assumptions would align the Dominican system more closely with international best practices. These changes are particularly important as the country prepares for a large wave of retirements starting in 2028.

Ultimately, the Dominican Republic’s pension system has made strides, especially among younger and higher-earning workers. But to fulfill its promise of financial security in old age, it must address the structural barriers that prevent consistent participation, particularly among informal workers and women. With data-driven insights from SIPEN and continued support from research institutions like the World Bank, the country has a unique opportunity to build a more inclusive and resilient pension future.