Fiscal Observatory of La Javeriana proposes changes for the pension

As with the labor reform, the Fiscal Observatory of the Javeriana University submitted a document with recommendations to the pension reform proposal filed by the Government of Gustavo Petro before Congress on March 22.

According to the Observatory, although the pension reform puts an end to the competition between the average premium scheme and the individual savings scheme, “This new pension system has significant opportunities for improvement”.

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

A first idea would be, according to the Observatory, reduce the implicit subsidies in the pensions of the Contributive Pillar. According to the document, all pensioners, including those who earn more than 3 minimum wages, will receive an implicit subsidy in their pension, which would be approximately one minimum wage for those who earn more than 3 minimum wages.

Despite the fact that the subsidy would be less than the current one in the average premium regime, the proposal would be aimed at reducing the contribution threshold from which the contributions are allocated to the individual savings component, and for this the Observatory suggests setting the threshold in a reference unit other than the minimum wagesuch as units of tax value or UVT.

(Also read: What are the pillars of the new pension reform and how do they work?)

The Observatory also proposes improve the governance of the Savings Fund of the Contributive Pillar created by the reform, which is nourished with resources from contributions, transfers, among others.

Although the project mentions that this Fund would be managed by Colpensiones through an autonomous patrimony, the suggestion is directed towards cCreation of an independent Steering Committee.

(Also read: What does it mean that Colpensiones could invest in TES?)

This would have government representation through the Ministry of Finance, a representative of the Bank of the Republic, unions, employers, a representative of the academy and other members elected by merit contest that demonstrate adequacy in financial issues, who is in charge of the administration of the fund.

LAURA LUCIA BECERRA ELEJALDE
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