PENSION REFORM PROJECT: WHAT IS THE DEBATE ABOUT?

On June 14, 2023, the Seventh Commission of the Senate of the Republic approved in the first debate Law No. 293 of 2023, which establishes the Comprehensive Social Protection System for old age, disability, and death of common origin (Pension Reform Project).

The project is currently at the Senate Plenary, pending the second debate, according to the following diagram:

Based on the discussions that will take place in the Senate, we consider it important to analyze the presentations of the senators regarding the Reform Project.

On October 05, 2023, Senators Martha Isabel Peralta Epieyú, Omar De Jesús Restrepo Correa, and Polivio Leandro Rosales Cadena, among others, presented positive papers for the second debate.

The purpose of the positive presentation is to support the Pension Reform Project presented by the Government and the text approved by the Commission, and to propose different modifications, in which the following stand out:

• Reduce the age requirement for women to benefit from the benefits proposed in the Semi-contributory Pillar, from 62 to 60 years. This approach is based on gender equality, which seeks that all people must complete three (03) additional years to those required to enjoy the pension right enshrined in the Contributory Pillar.
• Reduce the upper threshold of the range of contributions in the Contributory pillar regarding the public retirement system (Régimen de Prima Media), going from up to three (03) Minimum Salaries to only two (02) Minimum Salaries. However, it is highlighted that, although it is among the proposals, this approach is not reflected in the text of the presentation presented to the Senate.
• Reduce the weeks of contributions for women, as indicated by the Honorable Constitutional Court through ruling C-197 of 2023. Thus, from January 1, 2026, there will be a reduction of 50 weeks and gradually per year, there will be a reduction of 25 weeks, until reaching 1,000 weeks in the year 2036.
• Eliminate prior notice to the worker when the employer wants to exercise its power to request recognition of the comprehensive old-age pension. As the article is worded, it is understood that after thirty (30) days since the worker complies with the pension requirements without requesting recognition, the employer may process the recognition of the benefit before the administrator without prior notice. Notification to the worker must only be communicated to them once the procedure is done.
• Allow mothers or fathers with disabled children to access the old-age pension, if they have contributed to the General Pension System for at least 1,300 weeks.

For her part, on October 17, 2023, Senator Lorena Ríos Cuéllar of the Colombia Justas Libres Party presented a negative presentation whose objective was to argue the reasons that justify the filed of the Pension Reform Project. The senator presents, among other things, the following considerations:

• The senator highlights the lack of coverage of the Pension Reform Project, considering that by 2052, the number of people who would no longer be considered for recognition of an old-age pension would increase to 382,292. The deficit in the number of pensioners is mainly explained by the increase in the contribution time required to achieve pension rights.
• The Pension Reform Project does not provide guarantees of medium and long-term fiscal sustainability. This statement is supported by the concept of the Ministry of Finance and Public Credit, which establishes that each of the pillars would mean an additional cost of 75.19% in the long term, thus encompassing the resources of the Contributory Pillar Savings Fund for the year 2070.
• In terms of equity and inclusion, the Pension Reform Project does not offer great guarantees because although it aims to cover a large group of older adults who are in a situation of extreme poverty, 70% of the beneficiaries of the Semi-contributory Pillar would receive life annuities, lower than the income standard that allows overcoming this situation. We highlight against this argument that the senator did not present an in-depth study of the impact.

In response to the approaches of both presentations regarding the Pension Reform Project, the Senate Plenary must analyze each of the proposals in trying to reach a consensus, which will allow reaching a Pension Reform Project that responds to the interests of Colombian citizens. and preserve the fiscal sustainability of the system in the medium and long term.

Now, regarding the transition regime, the two presentations agree that current contributors to the system may continue to be beneficiaries of Law 100 of 1993, in its entirety. As long as by December 31, 2024, they have contributed 900 weeks, in the case of men, and 750 weeks, in the case of women. Without establishing any age for the application of this benefit.

Likewise, they establish that people who have said weeks of contributions and who are less than ten years away from obtaining the pension age would have two years, from the moment of enactment of the law, to change the regime, before double counseling.

Based on the above, once the text is approved by the Senate, it will go to the third debate before the Seventh Commission of the House of Representatives, and then carry out the fourth and final debate before the Plenary of the House of Representatives. 

Once the legislative process is completed, the bill approved by Congress will be presented to the President of the Republic for its presidential approval, promulgation, and entry into force.