The maximun contribution in the elderly retirement system: A new jurisprudential approach

On August 17^th, 2022, the Labor Chamber of the Supreme Court of Justice set the basis for a precedent that significantly changes the way in which the Colombian Pension Administrator - Colpensiones had been calculating the old-age pension, especially for those persons who had contributed more than 1,800 weeks.

In accordance with the article 34 of Law 100 of 1993, the old age pension in the Public Pension System (Régimen de Prima Media con Prestación Definida), currently administered by Colpensiones, is calculated based on a percentage that ranges between 65% and 55% of the base liquidation income (BLI) and that will be determined according to the affiliated's income, in such way that a higher income will result in a lower percentage and it will be added for each 50 additional weeks contributed over the 1,300 minimum required to access to the elderly retirement. The liquidation percentage will be increased by 1.5% without exceeding 80%.

It is important to remember that Colpensiones had been interpreting the rule in such way that only a maximum of 1,800 weeks of contributions were taken into consideration, those required to reach the maximum of 80% of the liquidation base for the persons whose (BLI) corresponds to a legal monthly minimum salary in force.

Considering this scenario, a person who contributed a total of 2,125 weeks at Colpensiones, and not being in agreement with the liquidation of his pension allowance, filed an appeal at the supreme court against the refusal of the Administrator to increase the additional 1.5% of the percentage of his base income for liquidation, under the consideration that the maximum number of weeks contributed is 1,800, and in that order the replacement rate can only be increased with 500 additional weeks to the 1,300 required by the Law as minimum to access the elderly retirement.

The Supreme Court of Justice recognized in the present decision that according with the Article 13 of Law 100 of 1993, there is not only a maximum for contributions, but also the law recognizes that all contributions must be considered for the recognition of the discussed pension. In fact, the Court points out that article 34 of the Law only provides that the base income for liquidation cannot exceed 80%, except for those pensions that are lower than one legal minimum monthly salary in force, in which case, it can reach to a 100%. Likewise, neither the law nor the intention of the legislator establishes a maximum number of weeks of contributions.

Thus, the same Corporation warns that it cannot be lost sight that the pension system established in Law 100 of 1993 provides special protection for the employment, so there is no reason to exclude weeks contributed after the first 500 weeks in addition to those necessary to reach the maximum amount of the pension, since this would undoubtedly vulnerate the right to work.

Likewise, the Labor Chamber of the Supreme Court of Justice emphasized that the increase of the replacement rate by 1.5% is intended as an incentive to productive work as part of the value of the Social Rule of Law, and for the respect of human dignity and work. With all this, the Corporation decided to protect the plaintiff rights and ordered Colpensiones to reliquited the amount of the pension, considering the maximum amount for such purpose, i.e. 80%. 

This decision showed that the arithmetic calculation that Colpensiones had been performing was not adjusted to the normative scope and was only considering a maximum limit of 1,800 weeks of contributions, when assigning the corresponding replacement rate for the liquidation of the corresponding pension allowance. Thus, the correct interpretation of article 34 of Law 100 of 1993, modified by article 10 of Law 797 of 2003, contemplates that the maximum amount of this pension corresponds to 80% of the base income for liquidation, a limit in which the number of weeks required to reach the maximum is not taken into consideration, therefore it is obtained from the general formula on the equivalence of weeks of contribution to the additional points to the minimum pension limits.

These considerations by the Supreme Court of Justice represent a change in the historical paradigm where Colpensiones estimated and paid old age pension. In this way, a jurisprudential precedent has been modified in which the pensions that have been recognized under the erroneous interpretation of article 34 of Law 100 of 1993 and now may be reliquidate according to the explained reasons.