The pension reform, which is another of the great tasks that the Petro government has set itself, is about to reach Congress, but not before generating debate.
EL NUEVO SIGLO consulted three former Labor Ministers, Rafael Pardo, Clara López and Ángel Custodio Cabrera, about their perception of what has been known about the initiative. They agreed that there are “some interesting issues”.
Clara Lopez
“It is a reform that has been postponed time and time again. When I was Minister of Labor, in 2016, the technicians recommended doing it to guarantee the minimum pension to contributors with the necessary subsidy required by those who earn less than three minimum wages, because with the contribution densities and their low amount, simply individual savings It is not enough to retire with a legal minimum wage without state subsidy, both in Colpensiones and in the RAIS. Take note that 80% of the individual regime contributors earn 2 or less monthly legal minimum wages and another 9.3% between 2 and 3 SMLM”, she said.
In what has to do with the contribution in weeks, he pointed out that “the reduction in the number of weeks of the individual savings system of Law 100 was to have a misleading hook to attract customers to the new system.”
He indicated that “a fundamental aspect of the law is the protection of more than 3 million people over the age of 65 who do not enjoy a pension and the million and a half who receive an excessively low stipend of around $85,000 per month. With the reform they will begin to receive $260,000, which would place them above the DANE poverty line. He does not contemplate the $500,000 that the president had initially calculated, for reasons of limited resources and fiscal sustainability. But to the extent that the growth of the economy and the level of taxation allow it, it will adjust upwards ”
Regarding whether the reform would help informal workers, he pointed out that “The concept of informality must be specified, since today it covers in terms of social security all employed persons who do not contribute or cannot contribute due to lack of sufficient income. With regard to helpless old age, it covers it, whether it is formal without enough weeks to obtain a pension or informal excluded below the poverty level”.
He explained that “the family pension consists of adding weeks quoted as a couple and in principle it is an excellent idea. I have not seen it in the reform and it could be considered. An innovation in favor of women is the recognition of 50 weeks per child up to three children in social compensation for raising children within the criteria that care must be recognized”.
“The Achilles heel may be the interests created in the funds managed by the administrators of the Individual Savings Regime and which today have $350 billion of the accumulated savings of the workers. These administrators receive important commissions equivalent to 3% to 5% of the salary of each contributor and not the amount of the contribution, which makes it the highest commission in the world in terms of pension savings management. In addition, in a rule that should be repealed, administrators were authorized to use pension resources for investments by the owners of private administrators. We hope that there will be a good dialogue that allows the approval of this reform, which among other things the World Bank has been recommending for decades”.
Raphael Brown
For the also former Minister of Defense and Labor, this is “a project based on pillars. In other words, a pension scheme (the Colpensiones) does not compete with another. It is similar to the one that was presented in 2013”.
Facing the price in weeks, he also found it similar to a previous project. “We had already established it in 2012. Duque removed it. Now he recovers again ”.
Regarding old age protection, he stated that “it is assumed that people who cannot retire receive $230,000 more or less. In the current (or previous) regime, 1,500,000 people received $80,000, out of 3,000,000 people who did not manage to retire. It has to do with the expansion of the pension system. The bonus for women for each child (up to three) is supposed to expand the system”.
Regarding the informal, he said that “they are within the 65-year-old category, the family pension can help and the bonus for women can help. I know of no studies that support it.
“The reform is good. It remains to see the impact studies on people who cannot retire”.
Guardian Angel Cabrera
“In principle, there are issues that are interesting in the draft of the pension reform that was released, such as everything that has to do with old-age protection for people who today have no income. For example, there is what is related to programs for the elderly, in which a contribution of $233,000 per month is raised. That is an advance in old age protection.”
Regarding other benefits, he indicated that “many people who have a thousand weeks of contributions could have some benefits. Women who have children would also be helped with weeks for their pension. There is also the possibility of completing the remaining weeks to receive an early pension. Those are the benefits that I see so far but, as I told you, we are just reading the proposal very carefully”.
On the other hand, he said that “there were doubts regarding the issue of the family pension and here what is done is to clarify. This would greatly help these people from the same nuclei that have contributed, but it is not enough for them individually to access retirement. Another important issue is the weekly contribution of workers who earn less than a minimum wage or who work part time. For me, this is the most important issue, because it helps, above all, in terms of informality, for people who have a job but are not making contributions, while contributing to the maintenance of the entire pension system in Colombia”.
He stated that in the face of informality “it is a good message that is being sent in this regard, but they have to mix it with the labor reform, because in that initiative they only leave it for the agricultural sector. On the other hand, here in the pension contribution, they leave it for everyone who earns less than a minimum wage, works part-time and can have two or three contributions at a time. There will already be tough discussions in Congress, especially around whether Colpensiones should manage the resources of Colombians.
“The message that this pension reform transmits is that it wants to protect people who today do not have access to a pension. It is a good message, but we are going to delve into the economic management of pension resources, it is where the discussion can be ”, she asserted.