12:01 AM
A crumpled sheet, with two paragraphs and full of signatures, defined the future of at least 26 million Colombians affiliated with the General Pension System. There it was established that the House of Representatives would accept the pension reform text approved in the Senate, with everything and its “monkeys”, to redesign the system that has governed for 30 years.
You might be interested in: This is how the pension reform approved by Congress will affect all Colombians
The “little game” promoted by the bench of Petro Government left doubts about whether the reform will be viable. Before July 2025, when it comes into force and sends 19 million more members to Colpensiones, the project will face lawsuits for unconstitutionality and it will have to be resolved what will happen to articles that the Senate let pass and would cost billions.
One of those who came forward was the judge of the National Electoral Council, César Lorduy, who evoked a ruling from the Constitutional Court (C-074-21), which declares a bill approved by the Chamber unenforceable, accepting the text of the Senate.
“The Court says: ‘Not knowing sufficiently what is approved, or denying the possibility of proposing, debating or adjusting, constitutes an abdication of the responsibilities entrusted to that body by the Constitution’“Lorduy said about the ruling.
You can read: This is how the weeks of contributions for women will decrease with the pension reform
In that crumpled paper, mentioned at the beginning, the signatory representatives say they have known in depth and in due time the reform text approved in the Senate, with which in some way they seek to recover in health. They even indicate that they have met the standards required by the Constitutional Court.
Whatever the case, the upcoming dispute will set a precedent in the country. The Democratic Center is already preparing its legal artillery to overthrow the initiative. “We are going to sue the pension reform as unconstitutional and violative of the bicameral exercise of Congress. We will not allow them to expropriate the savings of millions of Colombians through tricks,” said Senator Miguel Uribe.
For now, the Government is celebrating its victory, which means a breath of air in the midst of the scandals of recent months and the failed passage through the Legislature of other reform projects. “The country today has the most important reform in recent decades in social matters,” celebrated the Minister of the Interior, Luis Fernando Velasco.
And the “monkeys”?
In case there was a touch of uncertainty missing, the rector of the EIA University and former Minister of Finance, José Manuel Restrepo, recalled that having accepted the Senate text, he also revived the “micus” of the pension tax. And the same thing happens with the article that would make indigenous people, Afro people and peasants retire at a younger age.
It refers to the fact that the Senate approved – in article 84 – that “all pensions, including those received by Colombian residents from abroad, will be exempt from income tax. They will be taxed only on the part that exceeds 1,000 (thousand UVT).”
The problem is that this last part leaves the door open for the 1,000 UVT to be annual. That is, pensions of more than $47 million per year ($3.9 million per month) are taxed. The problem had already been resolved in the Chamber by clarifying that pensions would be more than $47 million per month, but that adjustment will not see the light of day.
Regarding the differential treatment of indigenous, black or peasant communities, it must be said that it was a proposal that entered the Senate at the last minute and was recorded in article 93; establishes that the Dane must calculate the difference in life expectancy between these groups and other Colombians, and based on this the MinTrabajo will determine the fewer weeks and years with which they will retire and access the benefits of the system.
“This article in the reform potentially creates a different pension system for 41% of Colombians. A system without clarity in parameters and costs. We know that there are communities that are lagging behind and have enormous challenges. However, a discussion of such importance cannot be improvised,” stated the president of Anif, José Ignacio López, at the time.
Colpensiones and Banrep hesitate
The other “weak leg” of the reform is the role that Colpensiones and the Banco de la República will play. The first leaves doubts because it will de facto receive 19 million people and its workers admit to not being prepared, while Banrep is not completely clear about its role as administrator of the Pension Fund that will be created.
Just this week William Rodríguez, president of Sintracolpen, one of the most important unions in Colpensiones, left a disturbing message: “We want, as workers, to make a call to all Colombians: “As workers we are the gold mine that can solve the pension reform (…) but currently we are not prepared.”
He exemplified that in order to serve the nearly 26 million members that Colpensiones will now have (with current members and those who will arrive), the staff would have to at least double.
He added that “we currently present technological problems, which lie in document managers and recognition applications, which with massive outages generate delays in responses to citizens.”
He also questioned the arrival of poorly qualified personnel. “There are flaws in the selection processes, people arrive at positions and do not know anything or have no knowledge (…) We are concerned that Colpensiones will become a political fortress of some party, because yes or yes it is a technical entity.”
For its part, the Banco de la República requests that its work be delimited from that of Colpensiones. “It must be clear that in the Average Premium Component of the Contributory Pillar, the responsibilities for financing pensions and covering any contingent risk belong to Colpensiones and the National Government and not to the administrator of the Fund.”
He also highlighted the importance of independence. “To fulfill its purpose as administrator of the Fund, Banrepública must have operational independence. This implies, among others, independence in selecting the vehicles through which resources will be managed and investment decisions will be materialized, freedom in choosing who will participate in the management of the portfolio and other technical and operational matters required for its management. ”.
The statement, signed by the manager of the Issuer, Leonardo Villar, was incisive in that the articles of the reform that refer to the Fund required greater clarity on the roles and responsibilities of the governing bodies of the Fund and its administrator, and the administration and investment guidelines. However, those calls were ignored in the Chamber.
Doubts about sustainability
Even if the reform sees light in the Court, its viability remains to be seen. The Minister of Labor, Gloria Inés Ramírez, admitted that it is designed for the next 40 years, but it should be reviewed within 15 years.
“We have taken this from international experiences, from other countries that have already experienced the demographic process, which is for example Japan, Germany, France, they solved it through migrants, let’s say in general terms. What we are saying here is that in Colombia, in the studies, we have up to 15 years to carry out a parametric reform that allows demographic adjustments to actually occur.“said the minister.
Meanwhile, the Autonomous Committee of the Fiscal Rule (Carf) warned that the reform would generate an increase in State expenses and disbursements towards Colpensiones, but without an increase in contribution income.
The CARF estimates that there will be an increase in the cost of the contributory pillar, since the reform introduces new elements such as early benefit, lower pension requirements for women, and the possibility of moving from the individual savings regime in charge of private pension funds. to the average premium regime paid by Colpensiones for less than 10 years to retire.
In the fiscal endorsement of the pension reform, the Ministry of Finance predicted that implementing it would cost $78.5 billion by 2070, while by 2100 this figure could rise to $500 billion.
For José Manuel Restrepo, from EIA, in the end, the positive thing about the reform is that it includes a solidarity benefit for 3 million older adults who do not have the possibility of pensioning, that competition between Colpensiones and private funds is eliminated and that mega pensions end.
But the negative, he continued, is the design of the regime that will cover people who have contributed, but were not able to retire. “If you have contributed between 300 and 1,000 weeks, from the new rule you will not receive the interest or the savings you have made, you will simply receive a very small value after your productive career ends.”
For Restrepo, the mechanism to define the contribution in Colpensiones on 2.3 minimum wages was anti-technical and seems more like a consensus between what the Government and the opposition wanted. He also questioned that the possibility of choosing where to contribute is eliminated and that in 2065 savings will end and pension liabilities will increase, bad news for today’s young people.
The pension reform will come into force in July 2025 and will include a pillar system. The contributory pillar, where the people who contribute to the system will be; the semi-contributory pillar, designed for those who have contributed weeks, but were not enough to retire; and the solidarity pillar, which establishes a monthly income for older adults living in poverty.
The effects of this project They will cover all Colombians, except men who already have 900 weeks of contributions, and women with 750 weeks of contributions, who will be part of the transition regime and will continue to be covered by the provisions of the current scheme.
The heart of the initiative is the contributory pillar. Basically, all contributions for up to 2.3 minimum wages will automatically go to Colpensiones. That is why it is said that we will all quote there. However, if you earn more than 2.3 minimum wages, the excess contribution will go to a private fund.
The person in charge of managing the resources will be the Savings Fund that will be created, and will be headed by the Bank of the Republic. Furthermore, at the time of retirement the person will receive a unified allowance between what was saved in Colpensiones and the private fund – if applicable.
Regarding the requirements, it is established that men will need to have at least 1,300 weeks of contributions and be 62 years old, while for women 57 years will be required and starting in 2025 the minimum weeks will gradually decrease from 1,275 to 1,000 in 2036.
Meanwhile, the solidarity pillar establishes that those who are in conditions of extreme poverty or vulnerability and have reached the age of 65, in the case of men, or 60, in the case of women, and do not have a pension, will be able access a basic income similar to that provided by Colombia Mayor, which at today’s prices would be $223,000.
For the semi-contributory pillar It was defined that men over 65 and women over 60 who have contributed between 300 and 1,000 weeks will have a life annuity that results from the sum of their contributions brought to the present value (that is, updated for inflation).
According to data from the Financial Superintendency, at the end of April there were 19.1 million members of private pension funds, and 6.8 million members of Colpensiones. Until that month, it reported 2 million pensioners, 1.68 million in the public regime and 332 thousand in the funds.
