Of the three major reforms that the government of President Gustavo Petro has set for itself (health, labor and pensions) to move forward, the text of the presentation of only one is pending to settle in the Congress of the Republic to start its analysis, discussion and subsequent approval.
(Also read: Health, labor and pension reform: this is what they cost the treasury)
This is the «Change for Old Age» bill, whose socialization advances through various public hearings throughout the national territory, but whose final text keeps millions of Colombians, unions and businessmen with great expectation, due to the scope and effects it may have for everyone’s future if it is approved as it is known up to now.
But what are those fundamental issues that arouse the greatest concerns, doubts and reservations? Here we tell you:
(You may also be interested in: Do your math: this is how a pension would be if the Petro Government reform is approved)
Do the changes of this pension reform apply to all contributors?
No. When this type of reform is produced, it is generally sought that people who are close to retirement are not affected by this change in the rules and this project is no exception. Article 76 of the initiative is clear when it establishes that the people who, at the entry into force of the law, have 1,000 weeks of contributions, will continue to apply in full the provisions of Law 100 of 1993 and the regulations that modify it, repeal or replace.
What is the limit to change the regime once the law is approved?
What is stipulated in the project is that people with more than 1,000 weeks of contributions or periods of service and who have less than ten years left to retire, will have two years from the enactment of the law to change the regime with respect to the previous regulations, but they must still have double advice, while the savings they will have in their individual accounts will continue to be managed by the AFPs until the integral old-age pension or the old-age pension of the previous regime is consolidated.
With the pension reform, will the retirement age and the weeks of contributions increase?
«Change for Old Age» is the initiative with which the Government seeks to expand pension coverage and provide greater protection to vulnerable older adults.
The project essentially does not address those conditions to obtain a pension in Colombia, 57 years of age for women and 62 years for men; in how many weeks the 1,300 are maintained in Colpensiones and 1,150 in private funds. However, as the project proposes that people who contribute up to three minimum wages in private funds (AFP) for their pension, transfer to Colpensiones, it is understood that an additional 150 weeks will have to be contributed to their pension to complete the 1,300 of that regime, which in the long run would imply three more years of contributions.
Asofondos calculations indicate that close to 95 percent of its current affiliates (18.7 million), who are in that range of three monthly minimum wages, will have to change regime if that point of the project passes without any modification in the Congress discussions.
Does the pension reform project increase the contributions that people currently make for their pension?
Not for people who contribute to their pension based on up to three minimum wages. Above this range (four salaries or more) they will have an additional charge of 2 percentage points on their contribution base. These resources will go to the Pension Solidarity Fund. And for those who contribute based on 16 and 17 minimum wages it will be 0.2 percent, 0.4 percent between 17 and 18 minimum wages, 0.6 percent between 18 and 19 minimum wages, 0. 8 percent between 19 and 20 minimum wages and 1 percent over 20 minimum wages. However, the bill also states that pensioners who earn an allowance of between 10 and 20 minimum wages will contribute 2 percent to the Pension Solidarity Fund, while those who earn more than 20 minimum wages will contribute 3 percent.
Will people who move to Colpensiones with the new rule have individual accounts there?
No, the resources will go to a common savings fund if they are in the maximum range of three minimum wages. What exceeds that level will remain in the individual account that the person has in the AFP. In order to prevent workers’ money from paying subsidies and subsidized pensions from others with the changes that are coming, Asofondos have to maintain them and thus people can see the evolution of their savings (close to 70 percent of total savings in the AFPs it is the product of the returns achieved).
Does the reform maintain the possibility that pension savings continue to be inherited?
Santiago Montenegro, president of Asofondos, assures that Colpensiones is unsustainable.
Sergio Acero. TIME
In this project, as Santiago Montenegro, president of Asofondos, has argued, the programmed withdrawal modality is put to an end, which will force current pensioners under that condition to transfer to a life annuity, therefore, those who prefer This type of pension will not have the possibility of inheriting their savings, to which their relatives will be entitled up to the fifth degree of consanguinity, as happens in the AFPs. But in addition, it takes away the right of people to choose in which regime they want to have their pension resources, since it will force more than 90 percent of the affiliates to private funds to switch to Colpensiones.
What alternatives does the initiative bring for those who do not meet the requirements to retire?
The proposal considers a scheme made up of four pillars: solidarity, semi-contributory, contributory and voluntary savings. Precisely, the semi-contributory is designed for people who do not meet the requirement of the 1,300 weeks required to retire and establish five groups. The first covers those who contributed for less than 150 weeks and will receive substitute compensation for the contributions made to Colpensiones, plus their balance in the individual AFP accounts.
The second group is that of those who contributed through Periodic Economic Benefits (BEPS), who will be granted a life annuity that responds to their savings; a third is that of those who contributed between 150 and 1,000 weeks, turned 65, and are in a condition of poverty and vulnerability, who will be granted a life annuity equivalent to the contributions in Colpensiones corrected for inflammation plus the balance of their account in the AFP.
The fourth group includes those who contributed between 150 and 1,000 weeks, turned 65, but are not in a situation of poverty or vulnerability, they are created a life annuity with what they have contributed to Colpensiones, corrected for inflammation plus 3 percent. percent return, added to what they have in individual savings accounts.
Lastly, there are those who contributed between 1,000 and 1,300 weeks and reached 65 years of age. They will receive an early benefit, proportional to the weeks that they actually contributed, and if they have resources in the individual savings regime, these will be transferred to Colpensiones and will be converted into weeks according to the regulations.*EL TIEMPO being part of a conglomerate of companies to which an AFP belongs.
