Given the controversy that has unleashed the proposal for Gustavo Petro to democratize the pensions of Colombians, and faced with the ignorance of many people about the initiative, the candidate himself explained this Saturday in a Twitter thread what his model consists of.
According to Petro, it is a pillar regime successfully created in the Netherlands, and hosted by the World Bank and Fedesarrollo.
The debate on pensions sheds light on what needs to be done:
1. We propose a pillar regime successfully created in the Netherlands and hosted by the World Bank and Fedesarrollo
The pillar regime makes the system of private funds complementary and non-competitive with the public
– Gustavo Petro (@petrogustavo) March 19, 2022
“The pillar regime makes the system of private funds complementary and non-competitive with the public one”, said the candidate in his explanation.
He pointed out that “The law will establish that from its transition date, the contribution will be determined between the public and private funds”. However, he said that the decision is free for current contributors to move their accumulated savings in the private fund to switch it for a public pension.
He added that already 87,000 Colombian men and women have switched from private funds to Colpensiones, with 55 billion accumulated savings.
“Such a wise decision seeking a pension, saved the Colombian State from bankruptcy”, Peter mentioned.
He also explained that it will be Colpensiones that will spend those resources on the payment of pensions for current pensioners and their acquired rights will not be affected. This will be done with contributions of up to four minimum wages as the base income of the contribution.
“If there is a surplus in the public fund account, it will not finance government spending. It will be the exclusive property of the public fund and its financial returns will become part of the Colpensiones budget”.
He said that with this model the Government will be able to reduce its transfer from the budget to Colpensiones by 18 billion annually.
“With this rational use of contributions, not only will the future pension of current contributors be paid, guaranteeing their right to a pension, but also current pensions without removing acquired rights”, said.
He also stated that with the decrease in the transfer to Colpensiones, the Nation’s budget will be able to finance a pension bonus of half the minimum wage for all elderly people who today do not have a pension.
Finally he said that “What we propose is the opposite of an expropriation that is being carried out with the current regime that provides bank profits but does not provide pensions. Total coverage of the elderly with pension income above the poverty line.”