From via crucis to desk, the path of pension reform in Congress

When Gustavo Petro was a candidate he made it clear that he wanted a pension reform, an idea that he kept on the agenda until this week, when the Congress of the Republic approved his project to create a pillar system and give the pension system the main shakeup since the Law 100.

The approval of this initiative was bittersweet for the opposition, which used all the tools at its disposal to delay the fourth and final debate, but also bittersweet for the Government benches. “I vote yes and I invite the plenary session to vote yes,” said Martha Alfonso, speaker coordinator, with a broken voice, when asked how she voted on the proposal so that the Chamber would accept the text that came from the plenary session of the Senate of the Republic.

This meant that, after months of debate and legislative problems, the House decided in one fell swoop to approve the reform, complying with what the Senate had already approved. That maneuver, although it did not include the sound of hands hitting the desks, is called pupitrazo.

This is how the new pension system was given life in the country, avoiding the discussion of the articles, largely because there was not much more time left for the initiative to complete its passage through Congress. In addition to the fourth debate, in which 89 articles still had to be approved, conciliation was pending. There was less than a week left for everything.

Saving the project, even if it meant losing months of work and leaving inconsistencies in the reform, was, according to Alfonso, the most difficult decision he has had to make in Congress. In any case, there was a celebration, because after all it was Friday. In the plenary session, the representatives of the Historical Pact said “yes we could” and the regulatory photo was taken in which the Minister of Finance, Ricardo Bonilla, appears smiling.

Pensions have also been on Bonilla’s agenda since before reaching the Treasury portfolio. More than two years ago, the current minister defended, in a broadcast organized by this newspaper, the need to carry out a reform and for it to contemplate a system of pillars, an idea that is similar to the project that came out of Congress on Friday.

It is not difficult, however, to imagine that there are also bittersweet feelings in the minister’s celebration, considering that in the third debate in the Seventh Commission of the Chamber he defended in a strong manner that the “lobby” of private funds in the Senate had allowed to approve two commissions, one for flow and the other for performance, and that the change that was coming out of the third debate was fair and necessary. “It means that they want to go from receiving $1.4 billion to $2.8 billion, that only for balance, plus what they would receive per flow, plus what they would charge those who are not contributing. How much do private funds want to earn? “He said at the end of May.

In addition to the change in the commissions for private funds, with the decision to accept the Senate text the Chamber also renounced the clarifications that the Seventh Commission had made regarding the savings fund created by the initiative, motivated mainly by concerns which was stated at the time by the Bank of the Republic. Among other things, the central bank said it considered it “inappropriate” that the appointment of committee members be left to its board of directors.

Another change that the Seventh Commission had made, and that will no longer see the light of day, has to do with the article that created differential conditions for indigenous peoples, black, Afro-Colombian, Raizal, Palenquera and peasant communities, and that some experts warned that in the In practice it was a parallel regime. From the presentation for the third debate it was eliminated, considering the fiscal impacts and the difficulty of implementing it.

It is no small fact that this article was approved at the last minute by the Senate plenary. It is worth remembering: there was little left to get the pension out of a second debate, but the vote on an unsupported proposition made the Government tremble because more than 15 minutes had passed and there was still one vote missing and the lack of quorum was a luxury that could not be afforded, considering the time restrictions. Luis Fernando Velasco, Minister of the Interior, called on the phone, walking from one side to the other. Everyone looked at the entrance. Finally, Senator Richard Fuelantala, from the Special Constituency for Indigenous Communities, entered the premises, went to his position and voted. The plenary applauded and the reform was saved.

Fueantala expressed his disagreement because his proposal for a differential approach was denied and asked that the situation not be misinterpreted. In the end, the Senate finished voting on its validity (July 2025) and approved en bloc the title, the passage of the project to the House and that article.

Courtesy of the Chamber and its decision to skip the debate on the articles, this provision for the reform will become law.

Not in vain, Representative Alfonso said that there remains the “responsibility to present on July 20 a project that adjusts what is unreasonable that came out of the Senate.” It must be remembered that the fiscal guarantee provided by the Ministry of Finance does not include the impacts of this differential approach.

Nor does it include the modification that came out of the Senate with which the requirements for women could reach 850 weeks, because in addition to the fact that the obligation for them will decrease until reaching 1,000 weeks in 2036, that corporation included the benefit of 50 weeks less for each child born. Are these measures sustainable? For now, we don’t know. With these and other considerations, opposition congressmen have already warned that they will demand the reform.

And in this way we return to one of the noblest traditions of Colombian democracy, apart from the beloved pupitrazo (which shone this Friday): settling legislative discussions in the judiciary, especially in the Constitutional Court (for recent examples just look at the tax and oil royalties).

In general, the project fulfills the promises made by President Gustavo Petro, although he also had to give in so that the reform could see the light at the end of the tunnel. The initiative that reached the Senate proposed a contribution threshold in Colpensiones of three minimum wages, but in the end, to reach agreements, mainly with the Liberal and U parties, the Government had to lower its commitment to 2.3 minimum wages. . The president said that he would even try to bring it to four (as his campaign proposal said), but he did not manage to do so, not even in the House presentations did that proposal reach.

In any case, at least for now, it seems that the famous solidarity pillar, which was the main workhorse of the promoters of the reform, will become a reality. The Government also managed to take away the role of private funds in the pension system (although not lower their commissions, as stated before); end balance refunds (at least for those who have contributed more than 300 weeks); pass to all members of Colpensiones, guaranteeing that all pensioners in Colombia will receive up to 2.3 minimum wages in allowances provided by that entity, among other points that President Petro had opted for.

The main fear that persists from the reform that Congress approved is fiscal sustainability, even more so now that the Senate project has been returned. But there are other fears, such as the validity of the initiative, for example.

In the attempt to debate in the plenary session of the House, and before the proposal to accept the Senate text was presented, several representatives warned that Colpensiones is not prepared to go from 6.8 million members to almost 25 million in such a short time. only one year, citing the reports of the Attorney General’s Office and the Comptroller’s Office and even the statements of one of the presidents of the workers’ union of that entity.

If Colpensiones is not ready, as its president (Jaime Dussán) assures that it is, users would pay the consequences. These and other questions remain on the table and will be answered over time.

Why was a pension reform being discussed?

The first thing to say here is that practically everyone agrees that the country needs to reformulate the rules of the pension system. The problem so far (and which will surely remain alive when they begin to demand reform) is how to reengineer this system.

The Colombian is a pension system that is not useful for pensioning, as several analysts have said, including Minister Bonilla. At this point, it is estimated that only one in four people of retirement age can access this social benefit.

On the other hand, the system also harshly punishes workers who have contributed little or sporadically throughout their lives. And this is a very broad scenario if one takes into account that labor informality exceeds 50% in the country and that 90% of the business fabric is made up of MSMEs.

In other words, the bulk of workers do not have a record of stable, continuous employment with high contributions, even more so when it is known that the vast majority of Colombians in the labor market earn less than a minimum wage, according to data from the Ministry of Job.

And, to add icing to the cake, the system ends up rewarding those who need it least, via high pension subsidies in Colpensiones.

What do the pillars of the reform look like?

The reform introduces important innovations in the Colombian pension system, regardless of whether they are completely beneficial or sustainable over time, but new elements in the end.

These include the pillar system, which is the heart of the entire initiative. The four pillars are divided as follows: solidarity, semi-contributory, contributory and voluntary savings.

-Solidarity pillar: This seeks to assist the poorest and most vulnerable people, who today are practically excluded from the system. Men aged 65 and women aged 60 who do not have a pension and meet certain criteria will receive a basic income corresponding to the certified extreme poverty line ($223,000 currently), an amount that will be updated each year.

-Semi-contributory pillar: In this pillar the reform targets people who begin to contribute, but for different reasons do not meet the requirements of the current system and, thus, are left in a kind of limbo: without a pension, but with an amount of savings that may not be of much use in old age.

In the current system, non-pensioners are returned the money they contributed (in the case of Colpensiones, without interest), but with the reform those who have contributed more than 300 weeks and less than 999 will receive that money as a life annuity.

The formula for those who are not beneficiaries of the solidarity pillar changed during its passage through Congress, reaching a subsidy of 20% in the case of men and 30% in the case of women.

-Contributory pillar: All formalized workers in the country go here. And their contributions to the system will be divided into two aspects if you like: a portion will necessarily go to Colpensiones, and another to private pension funds (the so-called AFPs).

That is, a person who earns six minimum wages, for example, would contribute the first 2.3 in the pay-as-you-go system and the remaining portion (3.7 minimum wages) would go to the AFPs. A user who wins two would do so only in Colpensiones.

The most immediate effect of this change is that Colpensiones will be strengthened and, on the contrary, the pension funds will see an impact on the size of the resources they will manage.

-Voluntary savings pillar: Here are all users who want, as its name indicates, to make voluntary contributions to increase their pension benefits.