Elections in Colombia: the pension system enters the presidential debate

The proposal to transfer the pensions that Colombians have in private funds to a public fund, made by the left-wing candidate Gustavo Petro, stirred up the race for the presidential elections on May 29 and has put on the table the discussion of a reform of the sector.

Petro, candidate of the Historical Pact, proposed changes in the pension system on Monday in a debate, among other things to use those resources to increase the subsidies received by the poor, which has been interpreted by his rivals and by analysts as a “confiscation”.

The first reaction was from the Colombian Association of Administrators of Pension and Severance Funds (Asofondos), which made “a call to the presidential candidates to give a rigorous, responsible, informed discussion, and above all thinking about the well-being of the workers”.

That, after Petro also said that private funds charge a 30% commission for the administration of these resources.

“It is not true that the commissions of the pension funds are 30%, they are 3% and are the same as those that exist in Colpensiones (state) “, said the president of Asofondos, Santiago Montenegro, referring to what he called “The lies that the candidate for the Presidency, Gustavo Petro, has uttered”.

mixed system

In Colombia, there is a mixed pension system that allows workers to contribute to the state-owned Colpensiones, under the average premium system, or to one of the private funds that entered the Colombian market in 1993 and function as individual accounts that receive contributions. of the worker and the yields, with the amount of which the pension is determined at the time of retirement.

Montenegro also denied that private pension funds have invested part of the money deposited by workers in infrastructure works that have resulted in problems and said that it is necessary “defend the pension savings that belong to Colombian workers”.

The economist Jorge Restrepo, associate professor of Economics at the Javeriana University, said for his part that “It is not true that individual pension savings resources are a public resource or state property”.

“The pension and company contribution, and the returns are the property of each person who saves for retirement; to nationalize it as he (Petro) proposed would be to expropriate it”, he expressed on Twitter.

In Colombia, where women retire at age 57 and men at 62, the pension system has a deficit of 42 billion pesos (about US$10.95 billion), according to Asofondos, which does not hide its concern about the possibility that the resources of private funds become public because the capacity to guarantee future pensions would be further compromised.

Widespread criticism

Petro’s rivals rejected the leftist leader’s proposal on the grounds that it goes against the workers, beginning with Federico Gutiérrez, candidate of the right-wing coalition Equipo por Colombia, who in the same debate stated: “Petro is going to put at risk the savings of Colombians in pension funds.”

“Financing social programs with pension savings not only compromises future pensions, it is also unfair. We propose to finance basic income for the elderly with progressive taxes. Petro proposes to do it with the future income of the middle class”, wrote Sergio Fajardo, from the Centro Esperanza Coalition, on Twitter.

In her turn, Íngrid Betancourt, from the Verde Oxígeno party, assured on social networks that her commitment is “protect the savings of Colombians, and be responsible with young people to guarantee them a pension”.

In the controversy, the Colombian president, Iván Duque, intervened, who assured that Petro’s proposal to dispense with private pension funds and send that saving of workers to the public system is “stealing the savings of citizens to put it at the service of politicking”.

“Talking about taking those resources away from the funds is an expropriation, that is simply a corralito like what we saw in other Latin American countries.”, said Duque, who considered “serious” that proposals are being made “with lies” What do they seek “delegitimize” a pension system that “can be improved”.

Due to the deficit accumulated by the sector and its low coverage, since only 22.5% of men of retirement age can access this right, while in women the rate is lower, 12.1%, a reform of the pension system that no government has decided to undertake due to the political cost that this entails.