Pension reform: challenges and concerns that the funds see regarding the project | jubilation | my finances

private pension funds met at their annual congress, during the last week of April, to discuss the future of the system, at a juncture where Congress is preparing to discuss the pension reform project of the Petro government.

(See: ‘Private pension funds no longer finance the Nation’: Petro).

Within the framework of the event, the presidents of Protección, Colfondos and Porvenir* shared with Portafolio their views on the reformthe challenges and concerns they perceive in the project and the elements that should be considered to reform the system.

While all acknowledged progress on issues such as the solidarity pillar, the elimination of competition between the private and public systems, or the protection of women, also questioned the ability of the proposal to encourage greater coverage, as well as the impact that would be seen on national savings and on future generations.

“There are some important points that we believe are advanced and that we should capitalize on from the reform, and there are others that we should work on. We agree that a pension reform is necessary, after 30 years of living this system, and even for many years, we have identified that it presents many challenges in terms of regression, inequity. Among the positive things to highlight about the reform is the fact that we are expanding the solidarity pillar, it is indisputable that a country with the inequities that Colombia has in labor matters should have some type of coverage for older adults who do not have an income. I also believe that it is important that there is a commitment to eliminate the subsidy for high pensions, but our call goes further, to review the subsidies at all income levels, because the contributory pillar continues to implicit a subsidy for a very large, close to 80% of formal wage earners in Colombia. We recognize that the system has the capacity to reform itself, we agree to eliminate the complexity that the system has by having two systems, we effectively propose to eliminate that competition, but that Colpensiones is one more player in a system based on capitalization, why ? take away the possibility of choosing a group of Colombians from a lower income barrier? Or why take away the possibility of building individual savings?”.

(See: The ‘buts’ of the study centers to the pension reform).

“We consider favorable the approach of a system of pillars that integrates and avoids the competition that exists in the two systems; the solidarity pillar that complies with the sense of supporting the most vulnerable people and the reduction of subsidies for people with higher incomes. We are convinced that any adjustment to the pension system must incorporate a long-term perspective and start from a citizen agreement and the principles of equity, sustainability and coverage. In this sense, a reform is needed that preserves a system based on people’s savings during their productive lives. As it is presented, the reform does not promote the sustainability of the system, nor does it adopt adequate measures to correct the reality of the aging of the population that can only be achieved with greater savings. According to Anif, the liability could increase between 230% and 250% if the pension reform passes as it is in the document filed. It is very important that people’s ability and autonomy to choose be preserved, that the future well-being of each individual be guaranteed, especially that of young people, and that the possibility of women achieving their pension based on their older age be resolved. life expectancy and a shorter contribution period than men. For the country, it is essential to have a dynamic capital market that allows this pension savings to continue to be managed by experts.”.

(See: Private funds warn about the impact of the pension reform on savings).

Juan David Correa, president of Protection.

private files

“We have spent many years, many governments, asking for a change in the rules of the old age protection system, what we have today is insufficient and must be reinforced. We celebrate that there is a reform. But the question is, what reform do we need for the system? This reform has positive things like that it unifies the systems. For several years the Government has been carrying out studies and recognizing that the subsidies to public pensions are very high, and that means that what is quoted is insufficient for pensions. The reform broadens the solidarity pillar, which is a very significant advance and there are other very important issues such as the recognition of maternity for women and the recognition of the disabled. But this reform does not increase pensioners, it continues to have that difficulty that pension coverage will not increase. The proposal has three pillars: solidarity, semi-contributory and contributory, the horrible of Colombians will remain in the semi-contributory, those people who do not have enough to retire, 78% of Colombians, only 3% will retire and the rest in the solidarity pillar. That is a challenge. And not only will coverage not be increased, but it will have a very high cost, many studies indicate that the public debt will double. There is a significant impact on the capital market and national savings. And also, another problem with the project is that the freedom to choose is limited”.

(See: Pension: the allowance for people with less than a thousand weeks of contributions).

Miguel Largacha Martínez, president of Provenir.

private files

LAURA LUCIA BECERRA ELEJALDE
Journalist Portfolio
*The company Porvenir is part of the business group that controls the company Casa Editorial EL TIEMPO, to which Portafolio belongs.