This Wednesday, March 22, the National Government filed its pension reform project, which proposes important changes to the current system.
(Government filed the pension reform ‘Change for old age’).
Precisely to understand the modifications that the Government’s proposal brings with it, it is worth making a general ‘recorderis’ about how the pension system that is in force in Colombia works.
To begin with, it is necessary to understand that the current pension system has two mechanisms that are in charge of managing the savings that each citizen makes throughout their working life until they are withdrawn from the market.
(Why the labor reform would affect the employment of householders).
– R.individual savings regime: This regime is a system made up of private funds, which allow the citizen to have an individual savings account in his name. In this, the person can accumulate money from his contributions, to which is added the profitability obtained depending on the management of the pension fund to which he is affiliated.
– Average premium regime: This is characterized by being a common fund, which does not generate returns, in addition to the fact that savings can only be replaced to the beneficiaries of the law. This public system is represented by Colpensiones.
(Congress already succeeded 84% of the PND in its first debate).
The current law clarifies that the minimum time necessary to be able to obtain a pension in the individual savings funds have 1,150 weeks of contribution, while in the medium premium fund there must be 1,300 weeks.
Likewise, in both systems, the age required to obtain the pension is 57 years for women and of 62 years for men.
(81% of Colombians prefer an individual savings fund for a pension).
In the event that a contributor fails to finish their weeks of contributions, private funds will return to the person their contributions made, adjusted for inflation and the returns obtained in the individual account. In the case of the private fund, a refund of contributions adjusted for inflation is also made.
Finally, current regulations stipulate that any type of pension can be presented in three specific cases.
(Labor reform would have a risk of 80 thousand jobs with applications).
– Old age pension: Applies to users who made contributions during their working lives and have reached retirement age.
– Disability pension: It is delivered to the person who suffers from any illness or disability that prevents him from continuing to work.
– Survivorship pension: It consists of a monthly payment that is delivered to the affiliate’s beneficiaries, in the event that the latter has died.