Solidarity pensions, in the orbit of Colombia towards reform

It is not the function of the director of Colpensiones to announce what is done with the pension resources in Colombia. The entity must dedicate itself to receiving the money from the allowances and distributing it to guarantee the pension of the validity”

José Antonio Ocampo, Minister of Finance of Colombia

In the midst of the controversy over the statements by the director of Colpensiones regarding the use of pension savings to finance infrastructure works, the Minister of Finance, José Antonio Ocampo, assured that the pension reform that will be discussed in the first half of next year must Take care of the tax issue.

In addition, the portfolio leader added in an interview with La FM that “it is not the role of the director of Colpensiones to announce what is done with the pension resources in Colombia. The entity must dedicate itself to receiving the money from the allowances and distributing it to guarantee the current pension.

What did the president of Colpensiones mean and what does he interpret from the response of the president of the Republic?

The president has already clarified that it is not the function of the director of Colpensiones to announce what is done with the pension resources. That money must be used exclusively to pay pensions. You don’t have to meddle in how the capital is used.

Nothing changes for now in pensions?

This issue has already been announced by the Government, but there will be support for those who do not have a pension, this being an issue that we are going to work on in the mix of the Colpensiones regime and private funds.

What do you like and what would the Ministry of Finance change about the current system?

What I don’t like is that there is no regular system to support people who do not have access to a pension, which is the majority in Colombia. For this there must be a subsidy that must be understood as a solidarity regime and especially for old age, not necessarily for a pension.

On the other hand, this mixture that was created between Colpensiones and private funds has a very inconvenient element since they compete and are not complementary as is the case all over the world. For example, in the United States there is social security, which is the equivalent of Colpensiones and there are contributions to an individual capitalization regime but they do not compete with each other.

Do you agree that some contributors and their pensions go to Colpensiones?

We have to see that in the internal discussions of the Government and in the agreement that is underway and that is led by the Minister of Labor.

In the Colombian pension system there are two schemes under which you can contribute: a Medium Premium Regime (RPM) and an Individual Savings Regime (Rais). The RPM, Colpensiones, is the mechanism through which affiliates obtain an old-age, disability, survivors or substitute pension according to the law. This is a common public fund, that is to say, the savings made by the beneficiary will be used to finance more people who have already reached the age or weeks of contribution to acquire the pension.

Under this scheme, those who are working pay taxes that are delivered to retirees. That is, the collection of workers is distributed among retirees.

On the other hand, in the Rais the contributor finances his pension with savings that he makes throughout his life, if he is linked to a private fund, he can retire when he gets enough money to obtain a monthly payment that allows him to live, the capital will depend on the time who has been making the fertilizers.