The pension reform of the government of Gustavo Petro will reach the Congress of the Republic on March 22. This step is taken after filing, on March 16, the labor reform.
(Read: Pension reform: more discounts for workers and the richest).
The basis of the proposal is a four pillar system: one solidary, another semi-contributive, one contributory and one voluntary. This 360-degree change to the pension system brought with it several doubts according to the known draft of the project.
What workers will not be able to choose between Colpensiones and private funds?
The reform proposes the contributory pillar, which has two components, the Average Premium, administered by Colpensiones, and the Individual Savings, in charge of the AFPs.
The first would be made up of all the people affiliated with the system and would receive the contributions for income between 1 and 3 monthly minimum wages current legal laws (smlmv).
The second component is integrated, according to the draft, “for all people affiliated to the system whose income is greater than three smlmv and receive contributions for the part of the contribution base income that exceeds three smlmv and up to 25 smlmv.»
(Also: What does it mean that Colpensiones could invest in TES?).
Do the weeks necessary for the right to retire change?
People have to contribute to Colpensiones, because their income is three minimum wages or less, they could not retire with 1,150 weeks, as established in private funds, and the mandatory contribution to retire would rise to 1,300.
What would be the income for the elderly who do not reach the pension?
The Government proposes giving a basic income of half a current legal minimum wage of 223,000 whichwould apply to around 2.5 million people in the country. A benefit superior to that granted in the Colombia Mayor program.
This benefit can be used for Colombians who reside in the country and are in condition of extreme poverty, poverty and vulnerability according to a targeting established by the National Government.
(See: Pension reform: requirements to access a bonus of 223,000 pesos).
What happens with the savings already established in private funds?
The money that affiliates have in their accounts would continue to be managed by the AFPs and would be used to recognize their pensions. However, new contributions on the first three minimum wages quoted will no longer go to the workers’ accounts.
What option do those who make contributions but do not need it have?
The semi-contributory pillar will be made up of people affiliated to the system who, at 70 and 65 years of age, have not met the requirements to access a contributory pension having contributed to the system. Therefore, you will be able to access an economic benefit that will start from the resources of the General Budget of the Nation and with your own contributions through different mechanisms.
«This pillar also includes people who are in the Economic Benefits Program, BEPS, according to the regulations that are in force.«, Explain.
(Keep reading: This is what the Petro government’s pension reform offers.)
How does the transition regime work?
The reform speaks of a regime of transition for people who have contributed 1,000 weeks. For this type of population, Law 100 of 1993 will continue to apply. Otherwise, people who have less than 1,000 weeks of contributions will be governed by the new law that Congress may approve.
However, article 77 of the draft establishes that people with more than 1,000 weeks of contributions or who are less than 10 years away from reaching pensionable age, they may transferwithin a period of two years, according to the regime with respect to the previous regulations.
How will the calculation of weeks be done?
According to the draft, for the computation, «the weeks quoted in any of the pension systems of Law 100 of 1993 will be taken into account: solidarity of average premium or with defined benefit or individual savings with solidarity, to the social security institute or to any box, fund or entity of the public or private sector, or the time of service as public servants, regardless of the number of weeks contributed».
And what about Colombians abroad?
Membership is voluntary for Colombians living abroad who do not have Mandatory Affiliate Quality or that by an employment contract they will remain in the country but are not covered by any regime of their country of origin or any other.