Colpensiones vs. Private Fund: Which Is Better for Your Pension in Colombia?

## Two systems, one important decision

Colombia has had two coexisting pension regimes since Law 100 of 1993:

• Average Premium Regime (RPM): run by Colpensiones (a public entity)
• Individual Savings Regime with Solidarity (RAIS): run by private funds (Porvenir, Protección, Colfondos, Old Mutual)

Choosing well can mean a difference of millions of pesos in your pension.

Colpensiones: how it works

Under RPM, your contributions don't go into an individual account but into a common fund used to pay all retirees' pensions.

Requirements to retire (2025): - Men: age 62 + 1,300 weeks of contributions - Women: age 57 + 1,300 weeks of contributions

Pension amount: between 55% and 80% of the Base Settlement Income (IBL), depending on weeks contributed. The minimum pension is 1 monthly minimum wage.

Key advantage: the pension is guaranteed for life, indexed to inflation, including the extra 14th payment.

Private funds: how they work

Under RAIS, your contributions go into an individual savings account that's invested and generates returns.

Requirements to retire: - Having accumulated enough capital to fund a pension of at least 110% of the minimum wage - Or being 62 (men) / 57 (women) + 1,150 weeks (for the government guarantee)

Pension amount: depends on the capital saved and its returns. More capital means a higher pension.

When does each one make more sense?

Colpensiones tends to work better when: - You have low or medium income (salary of 1–4 minimum wages) - Your work is intermittent or informal - You're a woman (women benefit more from the system's solidarity component) - You want certainty about your pension amount

A private fund tends to work better when: - You have high, steady income - You start contributing young (more time for savings to grow) - You want flexibility in how you receive your pension (scheduled withdrawal, life annuity) - You have enough of your own assets as a backup

Transferring between regimes

You can transfer between Colpensiones and a private fund, with restrictions: - You can only transfer once every 5 years - You cannot transfer if you're 10 years or less from retirement age

The transfer should be an informed decision — consult an advisor before deciding.

The multiple-employment problem

Many people contribute through two jobs at once. In that case, the total weeks contributed are counted, but contributions from the same month only count as one month of contribution.

What happens if I don't reach the required weeks?

• Colpensiones: if you don't complete the required weeks, you can receive a refund of contributions (what you paid in plus interest, with no monthly pension)
• Private fund: if you don't have enough capital for the minimum pension, you receive a substitute indemnity or your account balance

Do you have questions about whether transferring makes sense for your case, or need to calculate how many weeks you've accumulated? We can guide you on your specific pension situation.

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