Colombia's Pension Reform: Key Points
By: María Alejandra Almanza Núñez, attorney, Specialist in Labor and Social Security Law (Universidad Sergio Arboleda), Candidate for a Master's Degree in Labor Law, Labor Procedure, and Social Security (Universidad Externado de Colombia)
Note: this article was published in June 2024 and describes the situation at that time. It may have changed since; it is kept as a historical reference.
On Friday, June 14, 2024, the Congress of the Republic of Colombia approved a pension reform that will enter into force in July 2025. This reform marks a significant shift in the country's pension system. The following outlines the most relevant aspects of the reform, its impact on transfers between pension regimes, and how it will affect ongoing judicial proceedings.
1. Transitional Regime
- Women: Those with 750 weeks of contributions as of July 2025 will be covered by the transitional regime.
- Men: Those with 900 weeks of contributions as of July 2025 will be covered by the transitional regime.
- The conditions currently established under Law 100 of 1993 will not be modified for these individuals.
2. Contributions and Salary Thresholds
- Up to 2.3 minimum wages: Managed by Colpensiones (Colombia's public pension fund administrator).
- Above 2.3 minimum wages: Managed by a private Pension Fund Administrator (AFP — Administradora de Fondos de Pensiones).
3. Pension Calculation and Payment
- Upon meeting the conditions for retirement, savings held in private funds will be transferred to Colpensiones, which will be responsible for calculating and paying the pension benefit.
- This does not apply to individuals covered by the transitional regime.
4. Voluntary Pension Funds under the RAIS
- There are no changes to voluntary pension funds.
- The existing advantages of investment flexibility, tax benefits, and the opportunity to build supplementary retirement wealth are preserved.
Pillars of the Comprehensive Social Protection System for Old Age
The new structure is built around four pillars:
Solidarity Pillar
- Aimed at individuals living in extreme poverty, poverty, or vulnerability.
- Funded by the National General Budget and the Pension Solidarity Fund.
- Benefits elderly persons living in poverty and individuals with severe disabilities.
Semi-Contributory Pillar
- For those who do not meet the requirements for a contributory pension.
- Includes participants in the BEPS program (Beneficios Económicos Periódicos — a subsidized periodic economic benefit scheme) and is funded through public resources and individual contributions.
Contributory Pillar
- Comprised of the Defined-Benefit Component (Prima Media) and the Individual Savings Complementary Component.
- Contributions up to 2.3 minimum wages: Directed to the Defined-Benefit Component (Colpensiones).
- Contributions above 2.3 minimum wages: Directed to the Individual Savings Component.
Voluntary Savings Pillar
- For individuals who wish to supplement their pension through voluntary savings.
- Financial mechanisms are established to help participants meet minimum contribution week requirements.
Transfers Between Regimes (RAIS and RPM)
Article 76 of the reform introduces new conditions for transfers between the Individual Savings Regime with Solidarity (RAIS — Régimen de Ahorro Individual con Solidaridad) and the Defined-Benefit Regime (RPM — Régimen de Prima Media):
1. Conditions for Transfer
- Women: Those with 750 weeks of contributions and fewer than 10 years remaining until retirement age.
- Men: Those with 900 weeks of contributions and fewer than 10 years remaining until retirement age.
2. Deadline to Request a Transfer
- From the law's entry into force in July 2025 through July 2027.
3. Ongoing Judicial Proceedings
- Judicial proceedings concerning the invalidity of a regime transfer will continue under the current rules until the new law takes effect.
- Once in force, claimants may choose to continue with their existing case or avail themselves of the new transfer procedure established by the reform.
4. Flexibility in Transfers
- The new regulations create a window of opportunity for individuals who are fewer than 10 years away from retirement age and had previously missed the deadline to request a transfer, allowing them to do so within two years of the law's entry into force.
Implications of Transfers for Invalidity Proceedings
The reform includes provisions that ease the burden on individuals involved in judicial proceedings related to transfers between pension regimes. Those who failed to meet the time requirements under the prior rules will find in the new law an opportunity to rectify their situation.
Key Points
- Until the new regulations take effect, ongoing judicial proceedings will continue under current law.
- Once in force, judges will be able to rule on the early termination of pending proceedings based on the new regulatory framework.
Conclusion
The 2024 pension reform represents a significant change to Colombia's pension system. It is essential that pension fund members understand the new provisions and their implications. At Consejuridico, we are committed to providing expert legal advice to help our clients navigate these changes effectively and to their benefit. Our goal is to ensure that every individual receives the best possible guidance to secure their long-term financial well-being.
At Consejuridico, we closely monitor these legislative developments and offer specialized legal counsel on new regulatory interpretations.
Discover how we can help you protect your retirement. Staying informed and knowing your rights are essential to safeguarding your future.
Note: This information is subject to change and updates, as the reform will not take effect until July of next year. Furthermore, the reform may be subject to review by the Constitutional Court (Corte Constitucional), which could impose conditions on its implementation.
El asistente jurídico digital de Jurídiconline analiza tu situación específica. La revisión inicial es gratuita.
