Pension Reform

On June 14, 2024, the House of Representatives approved all provisions of Bill No. 293 of 2023 from the Senate “by means of which the Comprehensive Social Protection System for Old Age, Disability, and Common Death is established, and other provisions are enacted” (hereinafter referred to as the “Pension Reform”).

Thus, the Pension Reform is awaiting presidential approval to become law, set to take effect on July 1, 2025. Below, we outline the fundamental pillars of the Pension Reform and the changes it will bring to the current Social Security System in Pensions.

1. The Pillars

The Pension Reform designs a Comprehensive Social Protection System for Old Age, Disability, and Common Death through a pillar-based system grounded in the principles of universality, solidarity, and efficiency.

Here are the pillars that will be implemented with the Pension Reform:  

       1.1.  Solidarity Pillar

• This includes Colombian residents in extreme poverty, poverty, and vulnerability.
• It aims to guarantee a basic solidarity income to support the minimum living conditions of poor older adults and men over 55 with disabilities or women over 50 who, while not considered older adults, have a work capacity loss of 50% or more and lack a source of income to ensure a dignified life.
• A minimum residence of 10 years in Colombian territory is required.
• No pension must be held.
• Must not be a beneficiary of the Colombia Mayor program.

       1.2.  Semi-Contributory Pillar

• This includes individuals who, at ages 65 for men and 60 for women, have not met the requirements to access a contributory pension despite contributing to the system, allowing them to access an economic benefit in the form of a Lifetime Income:

• Contribution of between 300 and 1,000 weeks to the system.

       1.3. Contributory Pillar

• This includes dependent and independent workers, public servants, and individuals with the capacity to make contributions, allowing them to access an integral pension for old age, disability, or survivors within the system and other benefits.

• It consists of two components:

• • • Average Premium Component: Includes all individuals affiliated with the system and will receive contributions based on a contribution base income between 1 and 2.3 current legal monthly minimum wages (hereinafter “SMLMV”). To access the pension, the following is required:

    • Must be 57 years old (women) or 62 years old (men).

    • Must have contributed a minimum of 1,300 weeks at any time.

    • Starting January 1, 2025, the required weeks for women will be progressively reduced to 1,000 weeks as follows:

• • • • Individual Savings Component: Includes all individuals affiliated with the system whose income is above 2 and up to 25 SMMV.

• A single integral old-age pension will be recognized as a result of the two previous components.

      1.4. Voluntary Savings Pillar

• This includes individuals who make voluntary savings through existing financial system mechanisms according to the regime established by law, to complement the amount of the integral old-age pension.

2.  Contribution by Days or Weeks

The Pension Reform establishes the possibility of making contributions to the Comprehensive Social Protection System for Old Age for periods shorter than a month, by days or weeks, according to the following rules:

• The contribution percentages to the pension subsystem will not be affected; thus, for calculation purposes, the employer must consider 12% of the base salary of each worker, with the remaining 4% to be covered by the worker.

• For partial contributions to be valid, continuous work days will be required for each week. For example, if one intends to distribute 7 working days of the month within the 4 weeks, the employer must consider the SMLMV as the base income, since it does not constitute 7 continuous work days.

• A minimum partial contribution will be established as follows:

• A minimum weekly contribution income will be set, equivalent to one-fourth (1/4) of the SMLMV. This means that in all cases, the legal monthly minimum wage remains the base, only proportional to the minimum weekly.

• In the event of multiple employers, each employer must make the partial contribution independently.

3. Special Benefits for Recognition of Integral Old Age Pension

The Pension Reform proposes a series of special situations that will allow obtaining a Special Old Age Pension or additional weeks of contribution as follows:

• Parents of Disabled Children: Those with a child who has a permanent physical or cognitive disability of 50% or more, duly certified by the competent authority, will be entitled to receive the Special Old Age Pension at any age, provided they have contributed to the system for at least the minimum weeks required in the Average Premium Component to access the old-age pension.

• Women with Children: Women who reach the minimum age for the Integral Old Age Pension and do not have the required weeks may benefit by reducing the required weeks by 50 for each live or adoptive child, up to a minimum of 850 weeks for a maximum of 3 children.

• Early Old Age Benefit: Individuals not covered by the transition regime who reach 62 years (women) or 65 years (men) after the law takes effect and do not meet the minimum weeks to access the old-age pension in the Contributory Pillar may enjoy the early old age benefit if they have more than 1,000 weeks contributed.

• Family Pension: Recognized based on the combined contribution efforts of spouses or permanent partners.

4. Transition Regime

• Individuals who have 750 weeks contributed for women and 900 weeks for men at the time of the Pension Reform’s entry into effect will be governed by the regulations of Law 100 of 1993.

• Those without the minimum will be fully subject to the Pension Reform.

• Individuals with 750 weeks (women) and 900 weeks (men) who lack less than 10 years until reaching pension age will have 2 years to transition regimes, provided there is a guarantee of double advisory.

5.  Effectiveness

Once submitted for presidential approval, the aforementioned provisions will take effect from July 1, 2025.

Please do not hesitate to contact Brick Abogados if you have any questions or would like further information on the topic discussed above.

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This document is for informational purposes only and does not constitute legal advice, nor does it commit the responsibility or professional opinion of Brick Abogados.