Asofondos begins its congress at the height of the pension reform situation

In the midst of the political turbulence that the country is facing due to the eight changes that President Gustavo Petro made this Wednesday in his ministerial cabinet, The annual Asofondos congress began in Cartagenathe association that brings together the four private pension funds in Colombia: Protección, Porvenir, Colfondos and Skandia.

The event takes on special importance before a situation in which the Government is processing its pension reform projectwhich would change the current system to a pillar model that eliminates competition between Colpensiones and the Pension Fund Administrators (AFP).

(Also read: Uncertainty in the Colombian economy due to changes in the Government).

However, one of the biggest criticism it has received is that cAbout 90% of the affiliates who have private funds would go to Colpensiones, and various criticisms have been raised from Asofondos regarding the iimpact on savings that the project would have and also about future generations.

“This congress takes place at a key moment of reflection and evolution of a key system that has a little more than 30 years of history. After the challenges originated in the post-pandemic environment, and the difficulties generated in the markets in 2022, we must approach the present with dynamism”, said Marcela Giraldo, president of the Board of Directors of Asofondos.

Giraldo highlighted the results of the AFPs, which in the first quarter of the year the returns “to some extent recover the negative impact of last year”, which allowed reaching returns for $18.25 trillion.

(Also read: Asofondos assures that the pension reform will be fiscally unsustainable).

“The central theme of this meeting is the pension reform. In this context, it is of crucial importance to assess the responsibility of Congress, as well as the possibility that we have of accompanying them and contributing to this debate. From Asofondos we have said that a reform is necessary, and that it is necessary to evolve “said.

The president of the Board of Directors of Asofondos stressed that it is essential to advance the reform project, but that its discussion must take into account issues such as the importance of pension savings.

(Also read: Interview with Santiago Montenegro: ‘Without savings, pension systems are unfeasible’).

“The trend that indicates that more and more countries are implementing and
strengthening individual savings as the solution to the problem of coverage in the
old ageGiraldo said.

In this sense, he made a call to continue with the improvement of the capitalization systemthrough financial education, think about public policies that improve labor market conditionswhich will allow more Colombians to have access to a pension in the future.

Giraldo assured that There are five points that stand out from the reformsuch as the expansion of the solidarity pillar coverage, which expands the resources for the most needy Colombians. However, he called “so that these subsidies are not financed with the resources of contributing workers”.

Secondly, he qualified as “a breakthrough” the proposal of remove the competition regime between Colpensiones and the AFPs, but he spoke of the importance of Colpensiones saving those contributions, to guarantee future pensions.

(Read also: ‘We propose a public AFP with the rules of the funds’).

A third point to highlight was that of the limitation of subsidies to high pensionsbut made a call to review the subsidies at all income levels.

“We highlight the creation of a pension figure that allows you to continue contributing even as a pensioner, in the early pension modality. This contributes to the sustainability of the system. We consider it limiting that you have to wait until you are 65 years old and detrimental for the new generations to eliminate the figure of early pension by capital amount.”indicated.

Finally, he referred to the importance of maintain voluntary savings as a mechanism for pension planning.

LAURA LUCIA BECERRA ELEJALDE
Journalist Portfolio