Pension Reform in Colombia 2023
On March 22, 2023, the pension reform “Cambio por la vejez” (Change for Old Age) was filed before the Congress of the Republic. This initiative aims to achieve greater equity in the system and expand its coverage, in addition to providing a life annuity for seniors who are unable to retire.
The reform proposes to unify the pension system between the private funds and Colpensiones, based on four pillars that will expand the system’s coverage and guarantee social justice for those who do not have access to a pension allowance:
- Solidarity pillar: this pillar aims to provide a basic income of 223,800 to all people over 65 years of age who are at the extreme poverty line. Currently, figures indicate that there are about 2.5 million people.
- Semi-contributory pillar: this pillar will grant a life annuity to people who have not been able to retire but who have contributed weeks in Colpensiones or have savings in their individual account with a Pension Fund Administrator.
- Requirements:
- Be over 55 years of age
- Minimum of 150 weeks and 999 weeks
- Contributory pillar: Under this pillar are dependent and independent workers, public servants and persons with the capacity to pay contributions. It is composed of two mechanisms:
- Average premium component: individuals affiliated to the system and Colpensiones will receive the contributions from 1 to 3 SMLMV.
- Complementary component of individual savings: people affiliated to the system whose income is higher than 3 SMLMV and will receive contributions for the part of the contribution base income from 3 to 25 SMLMV.
- Voluntary savings pillar: This pillar indicates that people who have the capacity to pay can save with this mechanism to obtain a better pension.
Another relevant aspect is that it is proposed to make it mandatory for all persons earning up to 3 SMLMV to contribute to Colpensiones, in order to increase the number of affiliates to this fund.
In addition, the reform contemplates the inclusion of a pension bonus for mothers, which consists of a pension contribution recognition for each child raised.
Regarding disability and survivors’ pensions, the same requirements established in the current law are maintained.
In addition, a transition regime is established under which the conditions of Law 100 of 1993 will be respected for those who have 1,000 weeks of contributions. Also, a 2-year term is established so that people who are less than 10 years away from retirement and have 1,000 weeks or more of contributions can choose the applicable regime.
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