Pension reform: Asofondos warned that 80% of affiliates would not reach their retirement benefit

The union of the AFPs published its perspectives on the benefits that contributors would lose with what was approved in the reform.

Pension reform: Asofondos warned that 80% of affiliates would not reach their retirement benefits | Image taken from noticiasrcn.com

In an analysis of the reforms that continue standing in the Congress of the Republic, on the health and pension projects, which have already passed their first debates in the House of Representatives, Asofondos warned that with the approval so far of the new model of pension system 80% of affiliates will not achieve their pensions and likewise lose a large amount of their returns.

What benefits are at risk with the bill?

- Savings ownership

- Freedom of choice

- Heritability

- Pension age

Regarding the first point, Asofondos pointed out that by dividing the contributory pillar in two and forcing the contributions of the first three minimum wages to go to Colpensiones, the portion of the contribution corresponding to those salaries ceases to be individual property, which implies that 90% of workers will be left without this property from their savings flow.

As a second point, it established that freedom of choice is lost, since article 18 requires that all those who are listed in Colpensiones up to three minimum wages and from this amount they can choose.

Freedom of choice is highly valued by Colombians, since it offers the possibility of choosing which entity manages individual savings and thus offers the best returns. A survey conducted on Centro Nacional de Consultoría, collected data to establish that 78% of those consulted prefer to be free.

Another benefit that is endangered is heritability, since they will not be able to choose the type of pension in which the balance of their account remains as an inheritance to their children of legal age or other relatives up to the fifth degree of consanguinity.

The same happens with the possibility of retiring before the retirement age, since the possibility that today workers have of retiring before reaching the necessary age is eliminated if they have sufficient capital.

The president of Asofondos, Santiago Montenegro, pointed out that the project affects the generation of provisional savings, and as a consequence, the country's macroeconomic savings.

What does the union propose?

They plan four adjustments that could be made to President Petro's pension reform.

Savings as a fundamental pillar: the AFP unions insist that the contributory pillar must be a fundamental savings pillar, managed by private and public entities.

Adjustments to the semi-contributory pillar: a worker who contributed over a minimum wage will receive only $90,000 per month, while with an AFP he would receive $202,000.

In addition, the union suggests that subsidies for high incomes be eliminated, since with the reform, pensions that are settled on more than three minimum wages will receive subsidies close to $400 million that will cost the State.

As a last point, they propose that freedom of choice prevail, believing that Colombians should be able to choose who manages their savings and that each affiliate should always have an account with this savings in their name.

Article taken from noticiasrcn.com

By: Noticias RCN

https://www.noticiasrcn.com/economia/analisis-de-asofondos-sobre-la-reforma-pensional-448731

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