Home South AmericaColombia What are the pillars of the new pension reform and how do they work?

What are the pillars of the new pension reform and how do they work?

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What are the pillars of the new pension reform and how do they work?

The pension reformalready established in the Congress of the republichas in its articles several points that seek changes and set a precedent in the Colombian pension system.

(Government filed the pension reform ‘Change for old age’).

One of the main points in the outline of the bill is the structure of the comprehensive social protection system for old age, which is made up of several regimes: solidarity pillar, semi-contributory pillar, contributory pillar and voluntary savings pillar.

The pillars of the reform

Contributive pillar: This pillar is made up of older adults residing in Colombia who are in a situation of “extreme poverty, poverty and vulnerability”, depending on the focus of the National Government. The benefits in this pillar will be financed with the General Budget of the Nation together with resources from the Subsistence Subaccount of the Pension Solidarity Fund.

This pillar seeks, as explained in the reform document, “guarantee a basic income to protect the minimum subsistence conditions of poor older adults and will be administered by the Department for Social Prosperity or whoever the National Government defines”.

Semi-contributory pillar: This will be made up of people aged 65 or over who are affiliated to the system and who have not met the requirements to access a contributory pension despite having already had contributions.

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The people who are part of this pillar will have an economic benefit that will be financed, as explained in the reform, with resources from the General Budget of the Nation, with the particularity that this will be done with their own contributions through “the different mechanisms adopted for this purpose by the National Government”.

This will also include people who are in the Periodic Economic Benefits Program, as specified by current regulations.

Contributive pillar: This pillar will include working people, whether dependent, independent, public servants and people with a capacity to pay contributions that allows them to access a pension, disability or survivors in the system and other benefits established by law.

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At this point, it is made up of the regimes in force in the country, such as medium premium pension funds (public) and individual savings (private).

Voluntary savings pillar: This will be made up of people who make voluntary savings “through the mechanisms that exist in the financial system, according to the regime established by Law, in order to complement the amount of the comprehensive old-age pension”.

Faced with this section, it is specified in the reform that these contributions will not be seizable in accordance with the regulations that are in force.

Likewise, the Government will have the power to regulate a system of equivalencies so that the minimum requirements of weeks can be completed to be able to access a full old-age pension in the contributory pillar.

BRIEFCASE

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