In the midst of the discussions that have been generated after the filing of the rFormat pension and the eventual cost that it would bring to the fiscal accounts, the Ministry of Finance stepped forward.

The portfolio issued a statement in which it ensures that the project «can reduce between 7 and 12 percentage points of GDP the present value of the deficits of the contributory and semi-contributory pillars» of the pension system.

(Also read: Minister of Labor says that the projects are balanced with the fiscal possibilities of the country.)

According to the Treasury, with the implementation of the pension reform, the Net present value by 2070 of the deficits could be reduced from 67.5% (in a scenario without reform), to 55.2% of GDP.

«The Pension Reform bill makes it possible to strengthen the old-age protection system, makes it more equitable and in a financially sustainable way»the portfolio stands out.

(Also read: Pension reform was settled with criticism for the role of AFP and costs.)

Among the calculations published by the Ministry, the portfolio maintains that this favorable effect is derived, in the first place, from the new resource flows to obtain Colpensiones with the reform; also for the elimination of subsidies to relatively high pensions and by the implementation of a saving Fund that allows responsible management of pension system resources.

Minister of Finance, José Antonio Ocampo

Treasury

The ministry defended that the creation of the solidarity pillar makes it possible to consolidate «a substantial advance in terms of equity» due to: a 24% increase in the beneficiary population compared to Colombia Mayor and almost triple the amount of the monthly transfer directed to the elderly.

(Also read: Coverage and costs, the dilemmas generated by the pension reform.)

This, according to the ministry, will allow reduce the incidence of moderate poverty by more than 50%and in more than 85% the incidence of extreme poverty, in the population over 65 years of age, with a net fiscal cost of $3.8 trillion at 2023 prices (0.24% of GDP).

«In the midst of the public debate on the pension reform, some economic analysts
have presented fatalistic scenarios of the impact of the reform on sustainability
of the pension system. In the opinion of the Ministry of Finance, these estimates presented
conceptual and methodological shortcomings»
indicates the ministry.

within the methodological flaws According to the portfolio, the non-inclusion of all the income that will have the old-age protection system to pay the benefits and pensions that will be granted and the inclusion of the solidarity pillar within the pension liability stand out.

(Read also: The 10 criticisms that Asofondos has about the pension reform).

LAURA LUCIA BECERRA ELEJALDE
Journalist Portfolio

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