THE Colombian Association of Pension and Unemployment Fund Administrators (Asofondos), asked the Government to adjust the pension reform project that it presented to Congress to prevent workers from losing the 80% of savings they currently have in those entities.
“We estimate that only a fifth of the contributions will be saved and the rest will go to the common fund to pay the pensions of those who are already pensioners in Colpensiones,” the president of Asofondos, Santiago Montenegro, said in a statement.
When presenting objections to the project, the manager said that also 80% of those who are listed today will not be able to retire and will lose most of their returns.
It also points out that the vast majority of workers will lose their right to choose who manages their contributions and who pays them what corresponds to them, since dividing the contributory pillar in two and forcing the contributions corresponding to the 3 minimum wages to go to Colpensiones , leads to the portion of that contribution ceasing to be individual property. “90% of workers will immediately be left without this property of their savings flow,” says Asofondos.
Wages
Not to mention that these contributors are also forced to be managed by Colpensiones, and only those who earn more than 3 salaries, which is the minority of the population, can choose.
Now, in a matter of savings, they say that the project hits the generation of pension savings and, as a consequence, the country’s macroeconomic savings.
Among the proposals that Asofondos makes to the Government to adjust the project, it points out that savings must first be included as a fundamental principle: “Due to the demographic transition and the aging of the population, we insist that the contributory pillar must be fundamentally savings, managed by private and public entities”.
The union indicated that “let us remember that in recent days the National Administrative Department of Statistics (DANE) presented the birth figures of recent years, in which Colombia ranks seventh among the countries with the lowest birth rate in the world, which would not benefit the pension system in the future, since the fewer active workers for each older adult, the pension benefits for the new generations must be reduced”.
As a second point, Asofondos says that workers who do not retire receive a semi-contributory pillar, taking into account that 3 out of 4 Colombians do not retire, and most of them will not receive the solidarity subsidy.
“But, as the project was, a worker who contributed over a minimum wage will receive only about $90,000 pesos, while with an AFP he would receive $202,000,” Montenegro said.
Third, the Association proposes to eliminate the subsidies for workers with high incomes, since they ensure that with a system based fundamentally on savings, the subsidy for high incomes disappears.
Fourth, they say that the freedom to choose who manages their pension savings and have their own account should prevail, regardless of how the pension is settled at the time of meeting the requirements.
Positive aspects
Likewise, the union highlights that, among the 94 articles approved in this first phase of the project process, those that formalize and expand the solidarity pillar are highlighted as positive aspects, which integrates the two existing regimes into a single system, but needs additional adjustments, it limits the subsidies for high pensions (although it does not eliminate them) and there is a gender approach, which will allow progress in correcting the discrimination of the system towards women.
However, the union identifies some substantive aspects that are at risk and to which “we call attention so that in the following stages of discussion in Congress they are analyzed broadly and objectively, since this project is transcendental for everyone. We believe that there is a risk to the rights that workers have today, they may be affected in old age,” said Santiago Montenegro Trujillo, president of Asofondos.