Colombia: Pension Reform Approved by the Congress

Pension reform is one of the three major social reforms promoted by the government of Gustavo Petro. The bill was finally approved by Congress on Friday, June 14^th and is now awaiting Presidential sanction.

These are the main points to review:

1. We changed our average premium regime to a multiple-pillar model system. The contribution threshold to mandatory Colombian Pension Administrator (Colpensiones) has been set at 2.3 current legal monthly minimum wages. If a person earns more than this amount, the excess must be contributed to the pension fund administrator of the individual savings component.
2. Those who contribute between 300 and 999 weeks will no longer receive a refund of their contributions in a lump sum; instead, they will receive a lifetime annuity lower than the current legal monthly minimum wage, with a subsidy that will increase the capital by 20% for men and 30% for women.
3. Women with incomes below the current legal monthly minimum wage, who do not have an employment or contractual relationship, will be able to contribute solely to their pension without needing to contribute to health. Mothers will also be able to reduce the minimum required pension weeks by 50 weeks per child, up to 850 weeks.

   The contribution to the Pension Solidarity Fund will increase based on income levels, becoming 3% for individuals earning more than 20 current legal monthly minimum wages.

4. Finally, the previous pension system will be maintained in a transitory regime for contributors to the system who meet the following conditions on July 1st, 2025:

• For women with 750 contribution weeks and,
• Men with 900 contribution weeks.